ANC Conference to Delay Finalization of IRP

  • Minister of Energy Mmamoloko Kubayi has given renewed support for nuclear power in an answer to a parliamentary question, but her commitment has shown signs of wavering.
  • Kubayi aims to finalize the Integrated Resource Plan by the end of Q1 2018, but political factors could result in delays.
  • Kubayi was among those who supported Zuma in the recent confidence vote, but her cabinet position has been rumored to be under threat.

South Africa’s Minister of Energy Mmamoloko Kubayi on 14 August renewed government’s support for nuclear power in her answer to a parliamentary question from opposition Economic Freedom Fighter (EFF) MP Mzingisi Dlamini. This has provoked concern that the government intends to ensure that nuclear power is given greater priority in the revised 2016 Integrated Resource Plan (IRP) for Electricity, to the detriment of other feedstocks including renewables and gas. Although Kubayi’s answer merely restates the current government position, the way she chose to frame her reply provides an indication that nuclear energy is still central to energy policy.

Kubayi has repeatedly indicated that the updated IRP will be finalized by the end of Q1 2018. This is important, as finalizing the updated IRP has now become a condition for resolving the impasse between Eskom and independent power producers (IPPs). However, given the potential political fallout from the ANC’s national conference in December 2017, further delays are possible.

The finalization of the updated IRP will be an important step for IOCs interested in IPP opportunities. There have been various public consultations and roadshows since former Minister of Energy Tina Joemat-Pettersson released the much-delayed draft update in November 2016. After a final draft is presented to cabinet, further adjustments can be expected to align the IRP with political objectives. The final IRP will be published once the policy adjustments are approved by cabinet.

EFF MP Dlamini’s parliamentary question asked why the department of energy still intends to pursue “the nuclear energy option”, despite the Council for Scientific and Industrial Research (CSIR) finding that a combination of gas-fired power and renewable energy provides the least cost scenario for the IRP. Kubayi responded with an argument that nuclear energy prioritization is guided by the Nuclear Energy Policy and the original IRP 2010-2030. Kubayi indicated that the CSIR position would be taken into account and that the DOE is aware of the “importance of costs in this exercise”, but made clear that the views of other stakeholders would also be considered. 

Although Kubayi was seen as a staunch supporter of President Jacob Zuma when she was appointed to cabinet in March 2017, she has done less to drive the nuclear agenda since her appointment than was expected. In part, Kubayi has been hampered by the May 2017 ruling by the Western Cape High Court. The court set aside the decision to make state-owned power utility Eskom the nuclear procuring agent, and the ministerial determination for 9,600MW of nuclear power.

Kubayi has also launched an investigation into the involvement of senior DOE officials in supporting alleged irregularities in the granting of a tender to Mahlaka-A-Phalala as a nuclear transactional advisor. While Kubayi has made it clear that she supported Zuma in the August confidence vote, her failure to build momentum behind the nuclear program has led to rumors that her position might be under threat in yet another reshuffle.

Although Kubayi’s commitment to finalize the IRP by Q1 2018 is feasible, this depends on a number of factors, such as whether consensus can be reached in government. Consensus will be difficult in the current cabinet, where some ministers such as Deputy President Cyril Ramaphosa will be opposed to an accelerated nuclear program. External actors such as credit agencies will also be an important factor, as they will perceive the push for additional nuclear power as negative for ratings. Legal challenges are also expected to lead to delays if the final IRP does not adequately reflect rational policymaking.

However, we also expect the ANC conference to disrupt and delay the finalizing of the IRP, as the IRP outcome will depend on who emerges victorious as the new ANC president. If Ramaphosa wins, there is likely to be significant political disruption in Q1 2018 as Zuma will seek to ensure that he is not recalled by the ANC. This could even include a cabinet reshuffle that removes Ramaphosa and other ministers that supported Ramaphosa’s candidacy, although this should ultimately accelerate Zuma’s removal, as Ramaphosa will by that point have gained control of the ANC’s National Executive Committee. If Dlamini-Zuma wins, Zuma will also reshuffle his cabinet to remove Dlamini-Zuma’s opponents. The ANC is also more likely to split if Dlamini-Zuma wins. No matter who wins, the prospects of a new IRP in Q1 2018 appear doubtful.