HomeIndustry SectorsBusiness and marketsOp-ed: Spelunking Minister Mantashe's budget speech survey reference

Op-ed: Spelunking Minister Mantashe’s budget speech survey reference

By Chris Yelland, managing director, EE Business Intelligence

The budget speech by Minerals and Energy Minister Gwede Mantashe to Parliament on 18 May 2021 had journalists scratching their heads over the mention of a survey.

What did the Minister mean when he went off-script and said that “our research and our survey” of 10,000 people indicated that the market was not ready for a 50MW threshold above which a generation licence is required, and that a 10MW threshold would do?

This statement, however, stands in stark contrast to the stated public positions of business, industry, mining and labour associations representing over 25,000 companies in South Africa, and their workforces totalling literally hundreds of thousands of employees.

Many have come out in support of raising the threshold above which a generation licence is required to 50MW, and even higher.

Those in favour include Business Unity South Africa (Busa), the National Employers’ Association of South Africa (NEASA), the Congress of South African Trade Unions (Cosatu), Eskom, the Energy Intensive User Group (EIUG), the Minerals Council of South Africa (MCSA), the Aggregate and Sand Producers Association of South Africa, and many other bodies.

Cosatu general secretary Bheki Ntshalintshali, speaking on SAfm radio and reported in Engineering News [1], lent support to calls for a raising in the licence-exemption threshold to 50MW, and appealed to Minister Mantashe to “listen sometimes” to those in the industry who have indicated that a 50MW threshold would be more appropriate. 

“I think those are people who know better, they are involved in the industry, they want to invest, and we see no reason why government should not allow them to do that”, Ntshalintshali is reported to have said.

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Querying Mantashe survey

There was a sudden back-track from the Minister’s communication officials at the Department of Mineral Resources and Energy (DMRE), when queried about the research and the ‘Mantashe survey’. Queries put to the department included when and by whom the survey was conducted, the target audience, the questions, the statistics and the demographics of responses and respondents.

“The Minister’s remark with regards the 10,000 responses refers to comments received by the DMRE in response to the Schedule 2 amendment of the Electricity Regulation Act Gazetted on 23 April 2021. Receipt of such comments by the Department is standard and for internal use only,” clarified DMRE.

Business Day [2], on 19 May 2021 subsequently reported this about-turn in its headline entitled: “Mantashe now says survey of 10,000 didn’t happen with regard to embedded generation”.

But the media, affected parties and the public were left wondering as to what the Minister actually meant, and where on earth did the 10,000+ responses in response to the somewhat obscure and technical notice published in the Government Gazette [3] on 23 April 2021 actually come from?

Dear South Africa…

It has now been established that the responses referred to by Minister Mantashe (which actually totals some 16,000+ responses now) emanate from a somewhat dodgy website platform and company originally known as Dear South Africa, started by Rob Hutchinson.

It turns out that responses to the so-called survey referred to by Minister Mantashe are actually individual emails, sent one-by-one (as opposed to a being sent as a consolidated petition), originating from a campaign on the Dear South Africa platform [4], that was set up and branded by an entity called the Energy Experts Coalition, a name inextricably linked and associated with Ted Blom, an energy consultant.

The Dear South Africa campaign in question was specifically set up so that responses submitted to the DMRE in terms of its call for written comments, appear to come directly by email from the respondent, when, in fact, the responses come from a pre-canned form prepared by Dear South Africa and submitted via its website platform.

A check on the website of the Energy Expert Coalition website, shown on Ted Blom’s LinkedIn page, indicates that the domain may have been hijacked by “pirates” based in the Fushan District of Yantai, Shandong, somewhere in China, next to the Chanfu Automobile Repair shop on Xinhai Street.

When contacted to find out about his involvement in the particular Dear South Africa campaign in question, and the fate of the Energy Expert Coalition website, Ted Blom said: “Our website manager has not followed instructions. That petition went out without my checking.” He further says that the Energy Expert Coalition, under whose name the “petition” is sent out, is no longer operating or functional.

Mind already made up?

The real danger in all this is when an important draft amendment to Schedule 2 of the Electricity Regulation Act, that will affect the investment of literally hundreds of billions of Rands by the private sector in South Africa, is reduced to a simplistic, populist petition or referendum. 

In his budget speech to Parliament on 18 May 2021, Minister Mantashe gave the impression that his mind was already made up regarding the amendment of Schedule 2. This despite the fact that the call for responses only closes on 4 June 2021, and that virtually all substantive responses from affected stakeholders would not even have been received yet.

It is quite extraordinary for a minister of state to cite the unaudited and unverified output and responses of a dubious, third-party, online website platform, in a budget speech to Parliament, to justify preconceived notions of a 10MW generation licensing threshold. This misconstrues the very essence and purpose of a serious public and stakeholder engagement on the draft amendments to Schedule 2.

The critical thing now is that there should be transparent, rational, fact-based decision-making, taking substantial responses by affected persons and stakeholders into account, and that such decisions should not simply be based on preconceived notions supported by populist responses from a dodgy Dear South Africa campaign.

Background to the draft amendment of Schedule 2

Schedule 2 of the Electricity Regulation Act lists various types and sizes of electricity generation installations that are exempted from the requirement to have a generation licence issued by the energy regulator, Nersa.

Schedule 2 also endeavours to clarify the regulatory requirements for various power generation activities, including wheeling of power across electricity networks between generators and off-takers, and the trading of electricity.

Schedule 2 is of particular interest and relevance to operators of smaller electricity generation facilities, including standby generators, off-grid generators and grid-connected generation applications such as industrial co-generation, distributed generation, embedded generation and self-generation facilities in the commercial, industrial, mining and agricultural sectors.

Licensing and regulation of large, utility-scale coal, gas, nuclear, hydro, wind and solar power plants, may make some sense in view of their land and water use requirements, as well as concerns in respect of public health and safety, air, water and ground pollution, and CO2 emissions.

However, licensing of smaller generation facilities in the range of 1 to 50MW, such as a solar PV and/or wind power plant with battery energy storage, follows the same licensing procedures as that of a large 4,800MW Eskom coal-fired power stations, makes no sense, and represents a major cost and time burden that is both unnecessary and inhibiting.

The DMRE is therefore proposing an amendment to Schedule 2 to raise the 1MW threshold above which a generation licence is required in a grid-connected facility, to 10MW. Organised business, industry, mining and labour, on the other hand, feel that this does not even nearly go far enough, and suggest that the threshold be raised to at least 50MW.

It is clear from a reading of the draft amendment to Schedule 2 that is it is a complex, convoluted and poorly drafted technical document, that needs to be carefully and knowledgeably considered in order to understand the nuances and implications of the various clauses and changes proposed.

The draft Schedule 2 therefore clearly requires substantive and motivated responses from affected stakeholders in some detail, and not simply a trivial one-liner response that is typically allowed on a general, petition-type website platform.

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[1] Engineering News: Operation Vulindlela ‘close to resolving’ debate on easing path for distributed power projects, 21 May 2021
[2] Business Day: Mantashe now says survey of 10,000 didn’t happen with regard to embedded generation, 19 May 2021
[3] ERA Proposed Amendment to Licensing Exemption and Registration, 23 April 2021
[4] DearSouthAfrica: Minister Gwede Mantashe invites public comment, input or objection to the draft amendments to the Electricity Regulation Act. Closed 23 March 2021

Chris Yelland
Energy analyst, consultant, electrical engineer, public speaker, writer and managing director at EE Business Intelligence (Pty) Ltd.