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South Africa Power Report – 2020/21 Contents and executive summary www.africa-energy.com About African Energy Reports About African Energy Reports South Africa Power Report 2020/21 is the fourth in a series of easy to digest studies on key energy industry segments presented by African Energy ’s consultancy group. The reports are intended to provide executives, South Africa Power Report – 2020/21 financiers, investors, policy-makers and other Published April 2020 stakeholders with a concise but authoritative document that provides an overview of a country’s politics and risk profile, and of the major macroeconomic and business trends that impact DRaevpido Srltaste rEditor [email protected] on projects. The reports provide data to illustrate, and analysis to aid, understanding of critical ACjoayn Utrbibhiutors questions for the energy industry. Daniel Westbury-Haines About African Energy DLiavne M Darakts a Editor African Energy is a UK-based market [email protected] intelligence provider that has been helping businesses navigate the challenges of the African JEodn iMtoarrikas l Director continent’s complex industries for over two [email protected] decades. Sales and Service Managed and owned by Cross-border Direct:+44 (0) 1424 721 667 Information, African Energy has 16 full-time staff Fax: +44 (0) 1424 721 721 Email: [email protected] in the UK, and a network of correspondents and associates active in over 40 African countries. African Energy’s services include: www.africa-energy.com • Newsletter – A respected source of independent analysis since 1998, covering emerging energy trends and the political and governance issues that concern established operators, new entrants and the finance sector. • Live Data – Live-updated online data platform featuring more than 6,500 power plants in Africa. 2020 Cross-border Information. All rights reserved. Data and information published in African Energy is provided to Cross- • Consultancy – Bespoke consultancy and border Information (CbI) by its staff and network of correspondents through extensive surveys of sources and published with the intention of advisory services ranging from market entry being accurate. CbI cannot insure against or be held responsible for inaccuracies and assumes no liability for any loss whatsoever arising studies for developers and financiers to large from use of such data. public sector-tendered monitoring and evaluation No portion of this publication may be photocopied, reproduced, retransmitted, put into a computer system or otherwise redistributed studies. without prior authorisation from Cross-border Information. Registered office: 4 Bank Buildings, Station Road, Hastings, East Sussex TN34 1NG, United Kingdom. • Reports – Instant access to essential market Directors: JJ Marks, JM Ford, JD Hamilton, NJ Carn, E intelligence on Africa’s power, renewables, oil and Gillespie gas sectors. 2 AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020 Contents TABLE OF CONTENTS 1. EXECUTIVE SUMMARY .......................................................................................13 COUNTRY SNAPSHOT ............................................................................................18 2. RISK MANAGEMENT REPORT ...........................................................................19 3. POLITICAL OVERVIEW ........................................................................................22 3.1 Structure of government ...............................................................................................................22 3.1.1 Political system ............................................................................................................................22 3.1.2 Three tiers of government ...........................................................................................................22 3.1.3 Executive authority ......................................................................................................................23 3.1.4 Legislative authority .....................................................................................................................23 Box 1: Cyril Ramaphosa: a multi-faceted career ...............................................................................24 3.1.5 An independent judiciary under heavy stress .............................................................................25 3.2 Stability of political system ...........................................................................................................25 3.2.1 A social contract under pressure .................................................................................................26 3.2.2 Divisions within the African National Congress ...........................................................................26 3.2.3 ‘State capture’ and other governance concerns .........................................................................27 3.3 The main political parties ..............................................................................................................27 3.3.1 Governing party: the African National Congress .........................................................................27 Box 2: Profiles of leading ANC actors ................................................................................................28 3.3.1.i Factional divisions .....................................................................................................................29 3.3.2 The official opposition party: Democratic Alliance ......................................................................29 Box 3: Profiles of leading Democratic Alliance figures ......................................................................29 3.3.2.i Democratic Alliance splits: Good ..............................................................................................30 3.3.3 Radical opposition: Economic Freedom Fighters .......................................................................30 Box 4: Julius ‘Juju’ Malema and the EFF ...........................................................................................31 3.4 Elections ........................................................................................................................................31 3.4.1 Electoral system ..........................................................................................................................31 3.4.2 Most recent election ....................................................................................................................31 3.4.3 Voter disenchantment ..................................................................................................................33 3.4.4 Next elections ..............................................................................................................................33 3.5 Corruption ......................................................................................................................................33 3.5.1 Resistance to change ..................................................................................................................34 3.5.2 Foreign courts and ‘state capture ...............................................................................................34 3.5.3 Transparency International rating ................................................................................................34 3.6 Security risk ...................................................................................................................................35 AFRICAN ENERGY • SOUTH AFRICA POWER REPORT • 2020 3 Contents 3.6.1 Personal security and criminality .................................................................................................35 3.6.2 Risks of political violence ............................................................................................................35 3.6.3 Risk of terrorism ..........................................................................................................................36 3.6.4 Risk of ethnic/tribal conflict .........................................................................................................36 3.7 Political economy and major policy initiatives .............................................................................36 3.7.1 Downgrades and gridlock in the political system ........................................................................37 3.7.2 Economic policy ..........................................................................................................................38 3.7.3 National Development Plan 2013-30 ...........................................................................................38 3.7.4 Economic stimulus, recovery plans and social uplift ..................................................................39 3.8 Eskom and the ESI crisis ..............................................................................................................40 3.8.1 The politics of private energy investment ....................................................................................41 Box 5: Minister of mineral resources and energy Gwede Mantashe ................................................42 Box 6: The 2019 Integrated Resource Plan ........................................................................................43 3.8.2 Climate change ............................................................................................................................43