Premier urges President to show “backbone” with 2024 SONA

Media Release: Premier urges President to show “backbone” and outline decisive measures to address South Africa’s challenges

Premier Alan Winde strongly urges President Cyril Ramaphosa to use his 2024 State of the Nation Address (SONA) to tackle the multitude of challenges facing South Africa with urgency, courage, and determination.

“Our residents are at the heart of what we do as the Western Cape Government. President Ramaphosa should look to what we are doing here and enable the South African economy to grow so that more jobs are created, and that our citizens live in dignified and safe communities.

The President must:

• Devolve more policing powers and resources to the Western Cape. We have shown through our Law Enforcement Advancement Plan (LEAP), rural safety and K9 units that we can make our communities safer so that our residents can prosper.

• Address constraints in energy transmission infrastructure by bringing the private sector on board. Between 14 000 km – 20 000 km of high voltage transmission lines should ideally be constructed to adequately help meet growing energy demand. Eskom does not have the resources to do this. It has only been able to build 400 km per year on average. The private sector has the capabilities to identify specific corridors on a build, operate, and transfer basis, where the future transmission division of Eskom remains the owner of the network.

• Enable the private sector to invest in the Port of Cape Town. By enabling an efficient port, we can grow South Africa’s economy through exports by an additional R6 billion and create as many as 20 000 new jobs.
• Commit the government to return to a rational and credible fiscal framework that prioritises the needs of all our residents, particularly our most vulnerable citizens who rely on our public hospitals, clinics and schools.

Fiscal crisis

South Africa is facing an unprecedented fiscal crisis, created by national government’s mismanagement and corruption. It has centrally negotiated and acceded to the unaffordable public sector wage bill, which has placed further untenable strain on public budgets.

Premier Winde reiterated, “The scale of the resultant spending reductions are already severely compromising services countrywide. At a time when we desperately need to focus on future planning, policy certainty, and managing a credible budget framework, we are now having to cut budgets to find the money. We are already seeing the impact in some healthcare facilities, and I fear this will only get worse.”

The budget cuts are significant, not only for the Western Cape, but for the entire country’s critical public services.

The Western Cape Government (WCG) has declared an Intergovernmental Dispute with national government to ensure that we stop perpetuating this instability in our fiscal environment.

Logistics crisis

South Africa’s logistics crisis continues to strangle our economy. Ongoing inefficiencies at the country’s ports cost the national economy R200 million a day. In the rail sector it is even more alarming with R1 billion lost daily.

An efficient logistics sector enables economic growth and job creation. Premier Winde continued, “We have repeatedly raised our concerns with national government and Transnet. We have a critical economic lever here in the Port of Cape Town (PoCT) which must be optimised. We demand private sector investment in the PoCT, as well as a clear deadline for this.

Farmers have reported a 21% increase in output due to good winter rains in 2023 and better harvests and require more capacity in terms of vessels and port infrastructure as the peak fruit export season continues. The Premier said that once again a perfect opportunity to dramatically boost growth is being squandered, with disastrous effects for the economy.

“This is what frustrates me so much about how national government is responding to this self-inflicted crisis. The solutions are obvious and instead of boosting economic growth and creating much needed jobs we are hobbling the critical levers for prosperity”, said Premier Winde.

Energy Crisis

2023 was marked by the worst year of load shedding so far. “We have had 15 years of this catastrophic disaster, with situation only worsening. The Electricity Availability Factor (EAF) for 2023 was below the target of 60%-65%, at an annual average of a scandalous 52%. Alarmingly the EAF in the last two weeks of December 2023 dropped to below 50%, when demand is at its lowest. Power plants are failing more frequently and not returning sustainably to the system,” said Premier Winde.

The Premier proposes that President Ramaphosa focus on the following:

• The National Integrated Resource Plan 2023: While the WCG notes that the Department of Mineral Resources and Energy has indicated that the modelling for the IRP is being redone, other aspects of the plan also need to be addressed:
  • the price path for the various technology options is not clear;
  • the least cost option has not always been considered; and
  • the gas volumes have doubled in this IRP and are expected to be achieved in 2023. However, the country has almost no gas infrastructure to carry 6000 MW.
• The City of Cape Town has been given an exemption by National Treasury to be able to buy back energy from its customers. However, the WCG is concerned that other municipalities in the province that have applied on the same basis as the City’s application, have not been approved, without any clear rationale. This limits the extent to which municipalities can insulate themselves from load shedding as their customers with excess energy can no longer be considered to assist through the buyback scheme. In the interest of municipalities nationally, National Treasury should stipulate the requirements for such a scheme.
• Accelerate wheeling: It appears that at a national level that there is a push for virtual wheeling. While this is supported, the WCG believes that wheeling on municipal networks should be encouraged and enabled in municipalities that can manage this, to encourage local investment in generation capacity and to build the energy resilience of local governments and their economies.

“We cannot afford the country to languish in the constant messes created by President Ramaphosa and his government’s inaction. South Africa’s residents deserve better; here in the Western Cape we are showing that it is possible to change our country’s trajectory, and that we can do so much more not only here but in the whole country.”