Tag Archives: Richard worthington

Eishkom and avoidance of intervention

Richard Worthington, Daily Maverick, 15 January, 2018.

There are many points of entry for addressing the dire situation within our “public enterprise” responsible for electricity supply, particularly within Eskom Generation and the self-serving cabal within this corporate behemoth – a league of unknown extent that I shall refer to as Eishkom.

The ongoing refusal by Eishkom to conclude power purchase agreements (PPAs) that government committed to with renewable energy power producers over two years ago – and thus obstruction of more than R55-billion of investment – is probably even more damaging to the economy (inter alia via investor confidence and credit ratings) than the arbitrage that has been exercised over coal procurement and driven up fuel costs. This merits urgent intervention by the state: an immediate illustration of an ability to cut through capture by vested interests and honour fiduciary commitments made by the state.

The commission of inquiry into State Capture just announced by the president looks unlikely to be a promising point of entry for timely and effective remedial action, particularly if the advice of the public protector is followed, as reported in Greg Nicolson’s article.

Is it not patently absurd to suggest that terms of reference for an inquiry should “ensure that no stone is left unturned … in order to avoid any further allegations of State Capture being lodged with the Office of the Public Protector,”?

Talk about scope creep. How about the possibility of allegations of improper influence being raised regarding the recent deal or agreement with Russia for financing exploration for natural gas in SA territory, with associated consideration of importing their gas? Should the terms of reference seek to avoid such allegations being lodged?

As for Zuma’s call to uncover “… all those who may have rendered our state or parts thereof vulnerable to control by forces other than the public…” – One might as well then combine it with the process of ANC introspection, and indeed a performance (and outcomes) review of all our politicians, as well as state bureaucracy, the financial sector…

The DA apparently wouldn’t mind this being a fishing expedition and doesn’t seem able to drive immediate remedial action, or to be solutions-oriented beyond advocating privatisation. Nersa has failed to insist that Eishkom publicly disclose all the information upon which this monopoly made its application for tariffs, despite requests by many stakeholders, and has yet to publish the reasons for approval of the increase that was granted (far less than requested) late in 2017.

The parliamentary inquiry by the Committee on Public Enterprises was looking rather encouraging in 2017, although a key witness in hearings appears to be targeted for constructive dismissal by Eishkom – Jessica Bezuidenthout reports Company Secretary Suzanne Daniels saying “ the case against her had been “concocted’ and that it may have been a “ruse” to get her out of the way.”

It seems doubtful the committee could force remedial action by the recalcitrant minister.

It is widely agreed that Eskom is on a path to bankruptcy (some say on the brink), primarily due to the management of the generation division, particularly the costs (incl. of delays) of building the two coal behemoths Medupi and Kusile. Coal procurement seems to have become a patronage playground, under the guise of black economic empowerment, but without seriously threatening monopoly capital (and some players off-loading risks in the process).

Various mainstream commentators and industry representatives are flagging the dangers of a utility financial death spiral as electricity sales remain below the 2007 level and costs of operating the existing generation fleet continue to escalate. Is anybody considering scenarios for Eishkom taking down the whole corporate entity, e.g. for Eskom to be put under business rescue, say if Treasury (and the PIC) does not provide another massive bailout?

As important as it is to uncover past wrongdoing, we need to prioritise damage control and solutions and beware of impediments to radical intervention, including judicial processes that may be used to generate legalistic procrastination. The viability of our public energy utility is surely more important and urgent to the credibility of the currently ruling party, not to mention the economy, than ensuring that the scope of any inquiry is exhaustive? …

… Could it be that business rescue is the most promising point of entry to tackle the Eishkom malaise? What structure or institutional arrangement could succeed where government’s secretive “War Room” on Eskom achieved only some co-operation on demand management? It would certainly seem that the potential source(s) of capital have the best prospect of forcing changes that cannot await the outcome of comprehensive inquiries.

Here is the full article

Be alert to the risks of legitimising a hollow process for a new electricity IRP

Daily Maverick, Richard Worthington, 13 November, 2017

Imagine that, consistent with recent statements by the new Minister of Energy, an Integrated Resource Plan (IRP) for electricity is released in the next week or two, with a new generation build plan that mandates nuclear procurement. What would our response be?

For argument’s sake, let’s say the plan is scaled back to no more than half the total previously deemed necessary to achieve the benefits of “fleet procurement” (the 9.6 GW contemplated for a Rosatom contract), as a concession to widespread opposition.

Since there is a requirement for consultation, the minister would need to convene some kind of public engagement. There have been calls from various stakeholders for some kind of summit on energy (or the economy more generally), so even a very hastily convened event might be presented as being responsive to stakeholder concerns, as well as fulfilling requirements for the new IRP to be tabled in Parliament subsequently. What would we do?

Unlike the Integrated Energy Plan (IEP) that covers the entire energy system, the requirements for which are explicitly set out in the Energy Act of 2008, the process for seeking common ground on a policy-adjusted plan for the electricity system, before it is tabled for parliamentary approval, is not defined. Determinations by the minister that generation capacity will be procured must, as recently determined by the High Court (Western Cape), be subject to public hearings and Nersa consideration, but the new build plan of the IRP is nevertheless treated as binding…

… However, legitimising a hollow process on an IRP that will set parameters on electricity infrastructure investment for the coming decades carries enormous risk. Like in 2010, we might be assured that it will be regularly updated, but getting this one right – or at the very least ensuring it doesn’t mandate irresponsible procurement and greatly deepen our debt – is imperative for any prospect of reducing poverty and inequality…

he public narrative that we need nuclear power to meet our commitments to climate change mitigation is false, as is clear from work already released in the IRP documentation published for comment a year ago. Robust modelling by several agencies, including the Council for Scientific and Industrial Research, shows that an electricity system without nuclear can meet and exceed our emissions reduction commitment at lower cost and with higher employment than when new nuclear is included. The Energy Research Centre modelled scenarios with a range of cost assumptions and even the most optimistic pricing fails to find nuclear power offering net benefits over renewable energy options…

… With a positive objective in mind – an electricity system contributing to the well-being of all South Africans, with a net value that is positive for society as a whole and over time, when full costs and life cycles are assessed – we must be prepared to reject what might be put forward. To do this, stakeholders not accustomed to parading their interests and positioning in public need to consider how to avoid being complicit in legitimising a plan designed to serve the elite, and to start talking about taking a collective stand on electricity and economic prudence.

 

Here is the full article

 

 

Opportunity in Crisis: Can the electricity system transcend Eskom?

Richard Worthington, Daily Maverick, 1 November, 2017.

Stop! Lift your awareness from the stream of evidence of wrongdoing to give some thought to what we could start doing right.

The sorry saga of State Capture must be scrutinised, but we must not ignore a major impact of corruption, and of the stories it generates: it draws attention away from systemic problems and can lead to immersion in what are more symptoms than root causes of the big-picture failings of our society. It reinforces short-termism and provides cover for perpetuating the status quo, as is exemplified in the way the energy sector has been used to create new channels for wealth accumulation.

It’s logical that the largest State-owned Entity would be the prime target for predatory machinations, thus the viability of the national electricity system is a major casualty of illicit rent-seeking, as procurement is usurped for the enrichment of a coterie of arriviste capitalists. Our response to the predicament in which this places the electricity system must consist of more than dismantling the shadow state and prosecuting the corrupt.

It is vital that we also attend to those things Eskom has neglected and turn our minds to how we will get them done. What institutional transformation or innovative vehicle may serve to deliver the outcomes we require of the electricity system? Beyond the clear rationale for separating the management and operation of the wires from the business of generation, what more can be done to apply democratic practice to the energy system?

Here is the link to the full article – well worth reading and then acting!

THE TYRANNY OF REALISM: MEDIA RELEASE FOR PR NEWSWIRE FROM CLIENT WITS UNIVERSITY

Wits, Richard Worthington, 15 August, 2014.

A report exploring the political economy of energy planning under democracy and the Integrated Energy Planning (IEP) process due to conclude this year was launched by the British High Commission, Project 90 by 2030, and the Exxaro Chair in Global Change and Sustainability Research at Wits University on Friday, 15 August.

Titled: The Tyranny of Realism: Integrated Energy Planning (IEP) in South Africa in 2014, the publication explores some of the stratagems and dynamics at play in the contestation of our energy development pathway. It seeks to present a coherent perspective, and to stimulate and inform broad participation in South Africa’s second national IEP process currently in progress.

The full report is available here.

The launch of the publication concludes a short project undertaken by Project 90 by 2030 and funded by the British High Commission, and is written by South African energy policy researcher and activist, Richard Worthington.

“If one looks at the most likely consequences of the energy development pathways being treated as ‘realistic’ (for the world and for South Africa, by a majority of mainstream agencies), such realism is literally conceding defeat, in the face of drastic disruption to our life-support system and the biosphere of which we are an integral part,” says Worthington.

“The greatest flaw in so much energy planning and analysis is that we are not actually looking at and trying to understand the full extent of what is necessary. With so many interested parties and experts proclaiming what is not realistic, we have not – at least not yet – tried to develop a coherent vision of a just transition to sustainable energy.”

Worthington highlights the fact that government has recently committed, in principle, to another public workshop on IEP to present analysis that will feed into multi-criteria decision-making.

Professor Barend Erasmus, Director of the Global Change and Sustainability Research Institute at Wits University, says: “If we do develop very good technical solutions to the energy crisis, we are still unlikely to deliver an effective solution if there is no socio-political buy-in into the IEP process.”

British High Commissioner, Judith Macgregor, says stakeholder engagement and frank contestation amongst interest groups are vital to robust development planning and democratic processes to realise the best intentions of policy.

“The UK government is pleased to support not only the work of the South African government, but also civil society participation, including critique that is challenging and interrogates the boundaries of practicality. Dr Steve Lennon of Eskom, when discussing the fundamental change facing the power sector driven by the emergence of renewable and low resource intensity supply and demand technologies, concluded in an article last month: ‘We just need to have more confidence in our ability to do it!’”

The event also saw the introduction of the 2050 Pathways Calculator project, with the aim of gathering input towards the elaboration of this educational tool. The 2050 Pathways Calculator has been developed by the Department of Environmental Affairs in partnership with the UK Department of Energy and Climate Change, and models potential allocations of a national carbon budget. It is available as a download and a web version is available here.

Issued by:

 

KANINA FOSS

Senior Communications Officer

Advancement and Partnerships Division

University of the Witwatersrand, Johannesburg

Tel: +27 11 717 1024

SA’s fixation on nuclear energy based on ‘patronage’

Mail & Guardian, 18 August, 2014.

n his State of the Nation address this year, President Jacob Zuma said the energy department had committed to building more nuclear power stations,  generating around 9 600 megawatts of nuclear energy a year. He also said a new coal power station would be built, in addition to the two mega-stations underway at Medupi and Kusile. Unfortunately, renewable technology only got a perfunctory nod.

This decision goes against South Africa’s international climate change commitments, its own energy plans and ignores the global shift towards renewable energy. Professor William Gumede, of Democracy Works, said the move was being pursued due to a political agenda. “Projects are being implemented, essentially from a purely patronage point of view,” he argued.

Focusing on nuclear energy also comes with the perceived bonus of tying South Africa closer to Brics nations – Brazil, Russia, India and China – all of whom are nuclear-inclined states wanting to sell technology to the country, he said…

Read more…