Government policies and former energy minister Jeff Radebe’s contested Integrated Resource Plan (IRP), denounced at the time it was published last year as out-of-sync with South Africa’s power generation problems, has been put to the sword by Tito Mboweni.
This comes after the finance minister took the wind out of cabinet’s sails yesterday when he unveiled an economic restructuring strategy document many say runs counter to most departments.
Moreover, in respect of initial criticism that Radebe’s IRP vision was a little clouded by an unrealistic and unaffordable emphasis on costly solutions to the country’s electricity grid issues, Mboweni’s “Economic Policy Paper for Public Comment” is very clear about energy and its future role.
“The base case of the IRP should be unconstrained so that all policy options can be compared to the least-cost option,” the paper says.
The fact that this view clearly shows that Mboweni’s ideas are closer to private sector sensibility about Eskom and related matters, as was made clear when Gold Fields CEO Nick Holland recently lashed out at government’s restrained approached to energy alternatives, doesn’t make it easier for the Treasury chief’s peers or the ANC.
And although the paper, which states that it could grow SA’s GDP by up to 3%, is only a discussion document at the moment, its primary message of departmental policy restructuring to unlock economic opportunities is said to have already caused unease at Luthuli House.
However, with Reserve Bank data showing that growth will mostly likely limp along at just 0.6% for the rest of the year, Mboweni’s bold move to reignite the economy will probably dominate discussion in the coming weeks.
The paper highlights six themes it says could end the current economic slowdown, the longest downward trajectory since 1940, and create around one million jobs through the following:
- modernising network industries to promote competitiveness and inclusive growth,
- lowering barriers to entry and addressing distorted patterns of ownership through increased competition and small business growth,
- prioritising labour-intensive growth through agriculture and services,
- implementing focused and flexible industrial and trade policy to promote competitiveness and facilitate long-run growth,
- promoting export competitiveness and harnessing regional growth opportunities,
- quantifying the impact of proposed growth reforms.