Rudi Dicks, joint head of Operation Vulindlela, which was launched two years ago to drive structural reforms, says unless crime is dealt with there won’t be the necessary investment and the reform project will be jeopardised.
“If we don't deal with the law enforcement aspect then efforts around investment are not going to happen,” says Dicks, who is an economist by training.
“If we don't deal with cable theft and sabotage and fraud and corruption relevant to the structural reform programmes those investments are not going to take place, and those things are not going to happen.”
One illustration of this is how coal mafias have made nonsense of one of Operation Vulindlela's key goals — improving the performance of power stations and increasing energy availability.
Instead of achieving their 70% energy availability target the level has dropped to 60%, well below what is needed to support, let alone spur, economic growth.
“Coal is just the tip of the iceberg,” he says. “We're hearing other horrific stories told by Eskom employees at different power stations.”
A work stream has been set up in the newly created national energy crisis committee to deal with safety and security.
“The efforts of the safety and security cluster need to be intertwined to ensure that criminals who are sabotaging our investments in infrastructure are arrested and dealt with as a matter of urgency.”
Minister in the presidency Mondli Gungubele and finance minister Enoch Godongwana recently presented an upbeat report of Operation Vulindlela's progress in the second quarter of the year, but Dicks concedes there have been “challenges” over and above the central problem of rampant crime.
Coal is just the tip of the iceberg. We're hearing other horrific stories told by Eskom employees at different power stations
— Rudi Dicks, joint head of Operation Vulindlela
Although he disputes criticism that progress has been glacial, he concedes that structural reforms are happening too slowly, “particularly in energy and transport, which are the heart of our economy”, and need to be “speeded up”.
He talks about doubling capacity under bid window 6 of the Renewable Energy Independent Power Producer Programme to 5,200MW but admits that bid window 5 has fallen well short of expectations. After being announced with great fanfare by energy minister Gwede Mantashe 10 months ago, not a single successful bidder has reached financial closure.
He blames this on a number of factors, including the disruption of the component supply sector by the war in Ukraine and Covid, and the lapse of time between when bidders were announced and when they were required to achieve financial closure. Dicks's team are still waiting to hear if any bidders will be able to reach that point.
He won't comment on this, but it is believed another reason for the failure of bid window 5 is that bidders savagely undercut each other and the bid price came in too low for some.
It's been a steep learning curve, Dicks admits. “We need to ensure that bids are realistic and factor in sufficient risk so that the price is competitive but still cheap, and everybody is able to find financial closure and move on to providing energy.”
Future bid windows must have a shorter time frame and approvals by Eskom and the National Treasury must be much faster, he says.
“We don't think the approvals process needs to take so long. We believe it can be compressed and still comply with the law.”
His team have requested that the procurement processes for bid window 6 be fast-tracked.
“We've asked Eskom and the National Treasury to make sure they reduce the red tape and the length of time to approve these things. We've said, 'Reduce your time frames significantly so we can get megawatts onto the grid.'”
Drawing the process out, as with bid window 5, creates uncertainty in the market, reduces confidence in the process and puts at risk the ability to meet the country's energy security needs.
“It's quite critical that when we put out an IPP process we instil confidence, ensure the risks are well managed and streamline and improve efficiencies so that we put more capacity onto the grid as quickly as possible. That's the object of this exercise.”
The same goes for rail and ports.
“We need to push the envelope to ensure we deal with the crisis as quickly as possible, develop responses as fast as possible and deal with what is in our control from the regulatory, legislative and process point of view. We need to fix that across the government system so it is easier to do business in SA.
“It's important to cascade this across the entire economy to create the kind of confidence necessary for investors.”
As he's discovered, these things are easier said than done. He's still waiting for Mantashe to gazette the removal of the 100MW self-generation threshold announced weeks ago.
“We've asked for it to be gazetted as quickly as possible and the department of mineral resources & energy has given that commitment. It's a question of whether it will go for public comment or just be simply gazetted.”
We've asked Eskom and the National Treasury to make sure they reduce the red tape and the length of time to approve these things
More than two weeks ago electricity regulator Nhlanhla Gumede advised the minister to go for the latter because it would save time.
As an example of Operation Vulindlela's progress, Godongwana said he expected the passage of the hugely important Economic Regulation of Transport Bill “in the coming months”.
Shouldn't this have happened already? An independent economic regulator for transport is critical to enable properly regulated private sector access to the rail network.
“Yes, of course,” says Dicks. “This is something that has been long in the making. It has been flighted as one of our most important reform programmes.”
He says there have been delays in ensuring proper consultation is done.
So in spite of all the talk about fast-tracking it's the same old same old?
“We want to fast-track it to make sure it does happen because it is important for the restructuring of the transport network sector.”
The request for proposals for private sector access to rail ends in August. This, too, “should have happened long ago”, he says. “But it's happening now.”
He denies that the delays signal a lack of political will by those ideologically opposed to private sector participation.
“It's more a concern about how one determines this private sector participation. There are issues around transformation, around achieving some of our national interest issues like for example localisation.
“But I think there is significant political will. What we need to do is ensure that implementation happens as quickly as possible.”
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