There is always a roadblock ahead — events that get in the way of longer-term thinking.
The cabinet reshuffle in the short term is one such event; so, too, perhaps succession dramas in many senior leadership positions at Eskom this year. Both are important. Some of us have been talking about the need for change at the department of mineral resources & energy for almost five years.
The selection of a new Eskom CEO is likely to drag beyond end-March, given that no-one decent and in their right mind would take the job. The Venn diagram of supply and demand for CEOs of state-owned enterprises (SOEs) doesn’t ever seem to intersect well.
We will then have the distraction of the 2024 election. The problem with any elections (even internal party ones) is that the entire structure of government seems to shut down at least six months beforehand, reinforcing the vacuum of long-term thinking. Yet serious longer-term thinking is required to solve SA’s intractable problems.
The hole in teacher numbers will grow in the next five years as the current batch — many of them in rural and poorer areas — start retiring at a faster pace, given demographics. Little is being done despite the issue being well flagged. Due to the three- to four-year training cycle for teachers, investment needs to be made now with no immediate payoff.
The problem, unlike in logistics and energy, is that because the brewing crisis has limited impact on headline economic numbers for many years as productivity dips, the short-term political imperative to deal with children who have little sway in the political economy is limited.
Mindset changes
The load-shedding crisis is too often seen as a short-term set of political, rent-extraction and strategic discussions within the political economy as opposed to a long-term set of technological and environmental challenges that require new thinking and new mindsets. Eskom, now launching access for the private sector to its internal market and price setting for peaking power, is one example of this mindset change.
In bringing forward the Electricity Regulation Amendment Bill, which will come from the cabinet perhaps in about the next week, the national energy crisis committee similarly embeds mindset changes in how the sector functions with a forward-looking market. However, this kind of thinking is not taken up by the department of mineral resources & energy, or indeed the National Energy Regulator of SA (Nersa), which remains very much stuck in the present.
Planning for the long term to avoid crises often seems to lose steam precisely because they are a long way off. Eskom’s Transmission Development Plan has been screaming about underinvestment and the problems that result from transmission blockages on the horizon.
Even a short-run project to strengthen transmission with new transformers can take two years. Crucial long-distance, high-voltage line projects can take well over six years — and insufficient resources and money are being allocated. The government is blocking the private sector from entering this investment space.
A longer-term hole is opening up between 2025 and 2028 of greater and longer load-shedding because of underinvestment in transmission now. People are half aware of the issue but not really in any sense of bias to action, especially in some parts of the government. No-one in the department of mineral resources & energy or the department of public enterprises seems to take transmission seriously. Meanwhile Eskom funding constraints, reinforced by the need to scrape other budgets for diesel this year and again next year, all affect transmission.
Vested interests
A renewables-led system of the future will require not just short-term gas backup but also interseasonal storage through pumped hydro. A number of potential projects are in the development phase with Eskom’s interest, but there is little push on these projects, which might take 10 years to complete.
Sometimes perverse things happen around long-term thinking. However, the interest in new coal, even if bankable and insurable (which is impossible), wouldn’t deliver electricity for perhaps 10 years. This shows how vested interests and rent-extraction possibilities can suddenly make people interested in longer-term thinking for all the wrong reasons while glossing over practicalities.
Such passions are not aroused for transmission, pumped storage or teacher training.
Similarly, logistics is an immediate crisis in which some of the right thinking is now coming in with concessioning of parts of Durban port. Yet those plans are arguably only fit for purpose for current traffic in a growth-constrained economy, not the port demands that might be needed in 20-30 years, assuming a faster-growing, dynamic, emerging market once structural reforms are undertaken (suspend your disbelief for a moment please!)
Positive reforms that have started from Operation Vulindlela on logistics have this longer-term lens in mind, though the ministry and department of transport have lacked such a longer-term perspective until now. The opportunity to remedy this in the cabinet reshuffle is interesting.
The current failure of the infrastructure drive in government (student housing really doesn’t count) is unfortunate, with lessons not learnt on bankability, and a flurry of PR rather than hard work. This could have been an opportunity if it found its feet to inculcate longer-term thinking, planning, financing and execution into government at all levels. In particular, a conversation about long-term climate-resilient infrastructure planning has barely started even after last year’s floods in KwaZulu-Natal.
Still, these problems are hardly unique to SA. All economies suffer from short-termism and constrained thinking within election cycles. Perhaps it is just that other countries are not peering over the cliff’s edge in quite the same way.
• Attard Montalto leads on political economy, markets and the just energy transition at Intellidex, an SA research-led consulting company. This article first appeared in Business Day.
