The newsflow out of South Africa is unprecedented in its volume and the seriousness of the allegations in its content. The run-up to the African National Congress (ANC) elections, which will take place during the 54th National Conference in Kimberley on 16-20 December and are likely to decide the next president of the country, has seen a firestorm of accusations and political manoeuvring with the energy sector at its heart.
The conference will be a defining moment in South African history. A continuation of the policies that have characterised the latter years of Jacob Zuma’s presidency and a failure to prosecute those who have used the state for their own enrichment could lead to increased capital flight as well as the complete delegitimisation of the ANC in the eyes of its supporters, who are increasingly turning to the radical fringe. Most utility-scale renewable energy companies have long since stopped investing in new projects.
As always with Zuma, the motivation for his actions is both obvious and obscure. The latest cabinet shuffle, which resulted in yet another new energy minister, this time former minister of state security David Mahlobo, was reportedly preceded by a visit to Zuma by a mysterious Russian delegation. Coinciding with another interim chief executive at Eskom, speculation was rife that the shuffle was a last role of the dice for a nuclear deal with Russia. There is also talk that it may be an attempt to prevent the investigation of dubious oil deals.
South Africa’s Fin24 reports that former energy minister Mmamoloko Kubayi, now communications minister, approved the outstanding renewable energy independent power producer (REIPP) projects soon before leaving the department and left written instructions that the department and IPP Office proceed to financial close as planned. This has led to speculation that another energy minister has been moved due to their efforts to resolve the renewables stand-off with Eskom.
Farce at the Eskom disciplinary hearing for its former interim chief executive and group head of generation Matshela Koko – where the lawyer tasked with leading proceedings, whose appointment had already been questioned, was fired after an altercation with a journalist and many witnesses failed to turn up – as well as a parliamentary inquiry, and separate scandals involving international consultancy McKinsey and its Gupta-linked partner Trillian Capital Partners, and public enterprises minister Lynne Brown and her lover Ingrid Tufvesson, only distract from the downward spiral of the utility’s finances and upward spiral in the tariff it wants to charge.
Previously reputable organisations such as the National Energy Regulator of South Africa (Nersa) are being pulled into the vortex. The South African Wind Energy Association has publicly complained about the actions of Nersa and Eskom at a public hearing in September looking at the utility’s refusal to sign key documents with REIPP preferred bidders, a deadlock that has shown the institution toothless. The regulator also allowed Eskom to redact information about its controversial coal contracts from its tariff increase application. Department of Energy plans that could require small-scale electricity generators to register with Nersa have been strongly criticised, given their potential to disrupt the burgeoning off-grid market.
The Gupta scandal has shown its capacity to claim major scalps. UK PR giant Bell Pottinger is now in administration and a letter from Lord Peter Hain to chancellor Phillip Hammond – which names presidential hopeful and former Zuma spouse Nkosana Dlamini-Zuma – has led the UK to begin investigations into HSBC and Standard Chartered. The US Federal Bureau of Investigation is looking into McKinsey and its relationship with Eskom and Trillian.
The state capture affair has brought South Africa’s strengths and weaknesses into sharp relief. The constitution, civil society and judicial system have stood up well to astonishingly brazen attacks but state-owned enterprises and societal relations are being pushed to breaking point. More bad news following the national conference could push the country over the edge.
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