Presidential energy announcement hollow without immediate actionable steps

The announcement of President Ramaphosa’s plan to fix South Africa’s energy crisis is a welcome intervention in a dire situation for the economy. While the measures announced would significantly improve the situation, details are needed from the relevant cabinet members on the immediate steps that will be taken to implement the plan.  In particular, Agri SA is seeking clarity in terms of how the plan will apply to the agricultural sector. 

An estimated 25% of the country’s food production is reliant on irrigation and energy-intensive industries. Alleviating loadshedding is therefore a vital concern for the agricultural sector. The implementation of the President’s plan will thus be crucial to ensuring South Africa’s food security. 

Of prime importance for relieving the burden of loadshedding on the sector is the removal of the 1MW limit on embedded generation in the sector. This limit has made it uneconomical for the sector to invest in power generation and there is no reason why the 100MW generation cap should not have been previously extended to the agricultural sector. The sector has the ability to significantly ramp up generation, but government must remove all unnecessary restrictions in order to unlock private capital investment in energy generation for the sector.  

Engagements on this matter to date have yielded no results, and this must now be addressed with urgency. In light of the President’s address, Agri SA will be writing to Minister Gwede Mantashe to urgently address this matter. 

The escalation of loadshedding has come at a particularly difficult time for the sector. Over the past year, the sector has seen above inflation increases in the cost of vital inputs like fuel and fertiliser. The recent interest rate hikes have only exacerbated these cost pressures as South Africa’s farmers currently carry more than R190 billion in debt. The resulting increase in debt servicing costs will leave the country’s farmers in an extremely precarious situation. It is therefore imperative that government takes immediate action to curtail the additional costs that loadshedding has imposed on the nation’s food producers by ensuring they can rapidly begin investing in small scale embedded generation where possible. 

Government must also announce the details of the plan to enable the sale of excess power into the grid. This would ensure that the benefits of increased sector-generated energy are shared with Eskom-reliant consumers around the country – including those small scale farmers who may not be able to afford the investment in embedded generation currently. 

If these limits on agricultural sector power generation are lifted timeously, government will also need to invest in the safety and stability of the energy infrastructure to ensure that the grid is prepared to handle any excess power generated. 

Agri SA will make every effort to ensure that the sector can contribute to the alleviation of the energy crisis, but government must take the necessary steps without delay to enable the sector to play its part.

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Kulani Siweya

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