China quick to offer SA energy aid, says Ramokgopa

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South African electricity minister Kgosientsho Ramokgopa speaks with journalists on day two of the BRICS summit at the Sandton Convention Centre. Photo by Leon Sadiki/Bloomberg via Getty Images

South Africa is canvassing its other economic partners for assistance in its fight to end load-shedding — and China was first off the block, said Electricity Minister Kgosientsho Ramokgopa.

Ramokgopa, who was appointed earlier this year to help bring South Africa’s 15-year energy crisis to an end, was speaking after the signing of a joint memorandum of cooperation with five Chinese entities, including the superpower’s state utility. 

The memorandum signing took place on the sidelines of the 15th Brics summit, which is happening in Sandton, Johannesburg. 

Because of the sheer size of its economy, China is the commanding force in the five-country bloc. China’s dominance in Brics has put its cohesion into question, as its members negotiate intra-alliance relations.

When asked whether the minister had sought the assistance of South Africa’s other Brics partners, Ramokgopa suggested he had cast a wide net to find partners for the country’s fight for reliable electricity.

“We have engaged many countries that have a diplomatic presence here, not just looking at the Brics countries,” Ramokgopa said, adding that his ministry had also approached ambassadors from the major Western powers.

“It is not only unique to China,” the minister added. “But the people who have responded with lightning speed — it also surprised me — were the Chinese. No conditions. [They said], ‘This is what we can do. This is what we can canvas.’”

Through the partnership, South Africa will be learning from the best, Ramokgopa said.

“I am not suggesting that they are the only ones. We will wait for other countries to come. But we are moving at the speed of the fastest. We are not going to move at the speed of the slowest,” the minister added.

The objectives set out in the memorandum include: 

Enhancing South Africa’s energy security through regulatory reform, infrastructure and technology development, human capital development, and research and development capacity; 

Promoting sustainable energy solutions and diversifying South Africa’s energy mix;

Strengthening bilateral cooperation between South Africa and the Chinese entities in the energy sector to support South Africa’s localisation and industrialisation; 

Facilitating knowledge and technology transfer between the participants; and

Encouraging investment in South Africa’s energy sector

The signatories of the memorandum are the State Grid Corporation of China, the China-Africa Development Fund, the China Energy International Group, the China General Nuclear Power Corporation, the China National Electric Engineering Company, Huawei, the TBEA Group and the Global Energy Interconnection Development and Cooperation organisation.

The State Grid Corporation of China is the largest electric utility in the world.

The signing of the memorandum comes after China’s President Xi Jinping announced that China would donate R167 million to South Africa for emergency power equipment. China will also give its smallest Brics partner about R500 million in development assistance through a grant.

In his opening address on Wednesday, Ramokgopa said China has the largest coal-generation capacity in the world. The economic superpower also has the most installed renewable capacity — the amount of power it can generate from renewables — in the world. “The amount of renewables they have is 12 times the size of Eskom,” Ramokgopa said.

But Wednesday’s memorandum is thin on specifics about financing. 

Ramokgopa noted that the government is working on a financing instrument for upgrading the country’s transmission grid, which is viewed as the next frontier of the country’s efforts to get more capacity online. The minister has previously said this will cost Eskom R210 billion.

The electricity minister said the New Development Bank has expressed that it can make $3 billion (about R57 billion) available for transmission over the next five years. “And they are confident that their lending rates are favourable. We can get it from them, cheaper than what you can raise on the bond market,” he added.

“So there is this pool of funds. And some of the Western major banks have come to say they can support transmission, but these are the issues that must be resolved — governance issues, ownership issues and the like.”

Earlier on Wednesday, as part of the signing ceremony Song Lei, the chairperson of the China Africa Development Fund, advised South Africa to relax the black economic empowerment (BEE) rules to attract more Chinese investment in transmission and distribution.

“If you stick to the current bidding and tendering framework, it might be difficult to be efficient. I suggest streamlining the bidding and tender processes, especially for emergency and major projects. Consider allowing the direct participation of Chinese power companies through integrated investments and construction and operation models,” he said.

Acknowledging this advice, Ramokgopa said BEE is a major element of the country’s transformation agenda. 

“And there is no reason why we should dilute it. I think that we could do both, so we will listen further. It is not only those kinds of issues that they are raising. We think we will find each other, but we will not relent on issues of transformation.”

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