SA PRO-ZUMA GROUP BLOCKS ENERGY DEALS IN BLOW TO RAMAPHOSA

Daily Nation Newspaper - - NEWS FROM AFRICA -

JO­HAN­NES­BURG - South African Pres­i­dent Cyril Ramaphosa was dealt a po­lit­i­cal blow yes­ter­day, af­ter a last-minute le­gal chal­lenge by a group loyal to ousted leader Ja­cob Zuma blocked the sign­ing of $4.7 bil­lion in re­new­able energy deals.

The North Gaut­eng High Court agreed to hold a full hear­ing on the chal­lenge on March 27 af­ter the Na­tional Union of Me­tal­work­ers (NUMSA) and Trans­form RSA, a group which has lob­bied for Zuma in the past, on Mon­day ar­gued the deals would lead to coal-sec­tor job losses and should be scrapped.

State power util­ity Eskom was due to sign 27 mostly wind power and so­lar deals with in­de­pen­dent power pro­duc­ers (IPPs), in the first ma­jor in­vest­ment deal since Ramaphosa re­placed Zuma last month.

“We are con­fi­dent that the court will recog­nise that our rights have been vi­o­lated,” NUMSA said.

The projects were de­layed for two years un­der Zuma as he pur­sued a much-crit­i­cised $100 bil­lion nu­clear power plan.

Ramaphosa, a wealthy busi­ness­man, has made re­vamp­ing the econ­omy a top pri­or­ity. But many in­vestors are con­cerned about his abil­ity to push through re­forms given deep di­vi­sions in the rul­ing African Na­tional Congress (ANC).

Zuma re­luc­tantly re­signed last month un­der sus­tained pres­sure from sec­tions of the ANC but his al­lies re­main in high-level roles in the party and are op­posed to Ramaphosa.

“Given our his­tory, it is nat­u­ral that you sus­pect ul­te­rior po­lit­i­cal mo­tives in the court ap­pli­ca­tion,” said Do­minic Wills, a di­rec­tor at Sola Fu­ture Energy, one of the energy com­pa­nies in­volved in the deals.

Trans­form RSA, which wrote a let­ter to the ANC lead­er­ship in Jan­uary say­ing re­mov­ing Zuma would put the coun­try in“jeop­ardy,” de­nied it was mo­ti­vated by po­lit­i­cal ends.

“Trans­form RSA is a non-profit, grass­roots lobby or­ga­ni­za­tion,” the group’s pres­i­dent Adil Nch­a­be­leng told Reuters.

“We are op­posed to the pro­hib­i­tive cost of the IPP con­tracts.”

The energy min­istry said in a state­ment it de­cided not to sign the con­tracts un­til af­ter the court rul­ing and reaf­firmed its com­mit­ment to ex­pand­ing green energy pro­grammes.

Some in­vestors re­mained pos­i­tive. “I’m still fairly op­ti­mistic these deals will be signed. When you look at the cold, hard facts about our econ­omy, these are the sort of deals that need to be done,” Wills said.

NUMSA and Trans­form RSA ar­gue that a switch to re­new­able energy would in­crease elec­tric­ity costs for poor South Africans.

Energy an­a­lyst Chris Yel­land, how­ever, said the cost of re­new­able energy had fallen sig­nif­i­cantly and it was now cheaper than new coal and nu­clear projects.

South Africa re­lies on coal-fired plants for more than 80 per­cent of its elec­tric­ity gen­er­a­tion, while re­new­ables con­trib­ute around 7 per­cent. Eskom is one of the world’s largest pro­duc­ers of green­house gases.

“Ul­ti­mately this ap­pli­ca­tion is fu­tile and eco­nomic sense will pre­vail. South Africa must trans­form from a dirty energy econ­omy to a cleaner energy econ­omy,” Yel­land said.

South Africa’s re­new­able power pro­gramme was the fastest-grow­ing in the world seven years ago, at­tract­ing $15 bil­lion of in­vest­ment into wind farms and so­lar projects in­volv­ing a clus­ter of new IPPs backed by for­eign in­vest­ment.

Over the past two years Eskom stopped sign­ing re­new­able energy con­tracts and fo­cused in­stead on a plan to build a fleet of nu­clear power plants, in a deal that some mem­bers of the ANC and rights groups said would be open to cor­rup­tion.

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