Reliable power vital to kick-start SA’s economic growth

As the country enters a new decade after a weak finish to the last one, South Africa desperately needs decisive political leadership to pull it out of the economic quicksand in which it is trapped. A reliable and cost-effective supply of electricity is a fundamental requirement for business confidence and investment.  However, the current political indecision on how to address the lack of reliable and sustainable electricity supply is holding the country to ransom. It’s clear that Eskom’s problems are deep and long in the making, which will require cool heads and time to fix. 

The current approach of patching up unplanned and unpredictable outages from its ageing under-maintained generation fleet is not working, nor can it be expected to be a long-term solution. The logical approach would be to take the pressure off Eskom so that it can properly address its maintenance backlog and implement long-term sustainable solutions.  This will take time and means more (predictable) load-shedding. 

To bridge the gap, the private sector must be allowed to generate power and use the national and municipal grid to deliver that power to users.  Financiers stand ready to support this initiative and are willing to provide capital to build private generation capacity, underpinned by corporate and municipal offtakes. This approach will not only help stimulate economic growth and create jobs immediately, nor would it burden the fiscus, as no government guarantees will be required. Furthermore, international development financiers would encourage the development of a private electricity sector, particularly if it’s done using renewable energy, which is now the undisputed least-cost option, and the obvious choice for the country.  How long do we wait before common sense trumps political agendas?

Dario Musso, Co-head: Infrastructure Finance at Rand Merchant Bank