Department of Mineral Resources must not scare investors for renewable energy bid away

24 August 2020

The Democratic Alliance (DA) calls on the Minister of Mineral Resources and Energy, Gwede Mantashe, to reconsider the stringent conditions attached to his Department’s statement calling for requests for proposal (RFP) for emergency energy procurement from interested parties.

While the DA welcomes the initiative from the Department of Mineral Resources and Energy that endeavours to have 2 000MW additional power from independent power producers by June 2022, the onerous conditions of the RFP might scare potential investors away.

The conditions include:

Ownership and localisation must reflect Broad Based Black Economic Empowerment (BBBEE) requirements; and

stringent local content thresholds and targets for local construction and manufacturing.

While BBBEE might have had a virtuous start, it is now used mainly as a vehicle to enrich cadres and cronies – as seen again with Covid-19 corruption, with little of its claimed intended beneficiaries ever receiving a piece of the pie.

With a stated expected investment of R40 billion, these strict conditions might dissuade investors to pursue an avenue of investment that continues to become more vital to growing the South African economy.

The DA is also concerned about the lack of urgency in procuring the additional power. At the height of Stage 6 load shedding in December 2019 President Ramaphosa undertook to procure emergency additional power. Two and half years does not create an impression that Government is treating this as the crisis it really is.

The Department should rather incentivise potential investors to participate in the energy sector, which is still in its infancy in South Africa, thereby attracting new capital and technical skills. It is short-sighted to kill any interest before even a single rand has been pledged for the RFP.

Issued by Kevin Mileham, DA Shadow Minister of Mineral Resources and Energy, 24 August 2020