Parliamentary group suggests bringing back the national state of disaster
The Parliamentary Budget Office has suggested that South Africa consider re-implementing the national state of disaster, given that power utility Eskom’s challenges and impact on the broader economy have not improved.
Speaking to the Standing Committee on Appropriations, on Thursday (20 April) the group said that the country has been met with mixed messaging from various ministers dealing with the Eskom crisis, and that South Africa’s financial position is at odds with the solutions presented to deal with it.
The core function of the Parliamentary Budget Office is to support the implementation of the Money Bills Act by undertaking research and analysis for the four committees on Finance and Appropriations in the National Assembly and National Council of Provinces.
The group said that the newly appointed electricity minister, Kgosientsho Ramokgopa, has made it clear that Eskom’s problems go far beyond its current financial capacity and its failure has wide-reaching consequences for the country’s economy.
Ramokgopa presented a number of proposals to cabinet this week on a way forward to provide some level of reprieve from rolling blackouts. Controversially, one of the recommendations is to extend the life of current coal power plants, which will require significant funding to execute.
He said that Eskom, which is struggling with debt, cannot afford to invest in its capital equipment and will have to look for more funding elsewhere.
In this regard, the country has two options, he said.
Government can either prioritise the nation’s balance sheet, risking the collapse of the South African economy because of continues load shedding – or it can provide additional financial support to Eskom, which has its own drawbacks but could save the economy.
The budget office said that irrespective of whether one agrees with the minister’s recommendation on extending the life of coal plants – he is correct that the government needs to use more of the fiscus to help Eskom reduce load shedding.
With little progress being made not only in terms of Eskoms failure to provide stable energy but also its dire financial status, the budget office said that maybe bringing it back would be a step in the right direction.
“Eskom’s challenges and its implications on the broader economy must be addressed now. We had a state of disaster declared for this exact risk or reason. Perhaps it should be reinstated, because the situation hasn’t improved,” it said.
The group added that the current Eskom Relief Act, which aims to put the embattled company in a better financial position over the next three years, might not be enough to solve the problems it faces.
The committee noted that the National Treasury itself has also stated that conditions that loans for Eskom apply for only three years. Given the long period that the economy has suffered from rolling blackouts – three years may be too long.
National Treasury has made it clear that Eskom will not get additional financial support.
Short disaster
On 9 February, President Cyril Ramaphosa declared load shedding a national state of disaster with immediate effect. That same day the Department of Cooperative Governance and Traditional Affairs (Cogta) gazetted the declaration.
Ramaphosa said that the state of disaster would assist in coordinating a single point of focus against the energy crisis.
He said: “The state of disaster will enable us to provide practical measures that we need to take to support businesses in the food production, storage and retail supply chain, including for the rollout of generators, solar panels and uninterrupted power supply.”
This did not last long, however, and by 5 April, the state of disaster was officially terminated. This followed significant backlash and an onslaught of legal challenges thrown at the government.
Critics and opponents argued that the government’s declaration was unjustifiable and that before the declaration, the government already had all the authority and resources to handle the situation without resorting to the Disaster Management Act.
Read: The fight for control of Eskom is on