Scrap BEE as part of power crisis plan – IRR

President Cyril Ramaphosa’s plan to tackle load-shedding will not be nearly enough to address South Africa’s power-generation crisis if it stops short of scrapping BEE requirements in Eskom’s multi-billion rand procurement budget, says the Institute of Race Relations (IRR).

‘’While Ramaphosa’s call for urgency is welcome, the simplest and fastest way to cut the cost of electricity does not lie in waiting for Parliament to pass unspecified laws,’ the IRR argues.

‘Rather, the 100MW cap on private unlicensed power generation is removeable by the same process that introduced it, namely the flourish of one Minister’s pen, post haste. Likewise, the Minister of Finance is empowered to exempt organs of state like Eskom from BEE red tape if doing so is in “the public interest”.’

The IRR says in a statement: ‘Minister Enoch Godongwana already applied such exemptions briefly to Eskom earlier this year, and the IRR urges the minister to do so again, particularly for the sake of jobless South Africans who will not exit the unemployment line while load-shedding remains a perennial threat to business.

‘The State Capture Commission has pointedly urged that procurement officers should prioritize “maximizing value for money” over racial numerical targets. This advice is delivered by the IRR’s petition to end BEE in Eskom procurement to Ramaphosa’s cabinet where it can be implemented by cutting racial red tape right now.’

The IRR notes that Eskom CEO Andre de Ruyter has said that ‘there is a “strong case” for applying exemptions from BEE to Eskom to avoid “interposing non-value-adding intermediaries” that inflate costs, slow down supply chains, and add risks of corruption’.

‘It is worth highlighting how onerous racial red tape can be, and how far the system’s latest author has distanced himself from current procurement regulations.

‘In 2017 Pravin Gordhan was the Minister of Finance from which office he passed regulations that allowed organs of state like Eskom to outright ban business with some providers on the basis of race. This was deemed unconstitutional in court, but remains in place until next year.

‘Gordhan has moved so far from his 2017 position that, as Public Enterprises Minister, he not only accepted without demur the Constitutional Court’s slap down of his former regulations but went further towards pragmatism by welcoming the opportunity to consider rehiring a few experts who were let go from Eskom because of their race. However, genuine pragmatism requires more than symbolic gestures.

‘Eskom’s procurement spend is over R155 billion and is set to more than double if it buys electricity from independent suppliers at the promised rate. These funds must get maximum value for money.’

Said IRR Head of Campaigns Gabriel Crouse: ‘Ramaphosa’s great promise is that firms outside Eskom get to join the project of powering South Africa. The great danger is that these businesses are paid billions extra for the sake of ‘tycoons’ of a particular race, as the Black Business Council has called for. That would not be empowerment; that is crony capitalism. To stop cronyism and fight load-shedding we need to cut the reddest tape of all.’