FMF applauds government on new threshold to produce electricity

Johannesburg – The Free Market Foundation (FMF) welcomes the decision by President Cyril Ramaphosa’s Cabinet to lift the threshold for companies to produce their own electricity without a licence, to 100 MW. The FMF recently recommended precisely this reform, among others, to bring about an end to rolling blackouts in South Africa.
The President’s announcement included the aspect that generation projects will be exempted from the National Energy Regulator of South Africa (NERSA) whether they are connected to the grid or not. Wheeling electricity through the transmission grid, subject to wheeling charges and connection agreements with Eskom or the relevant municipality, will also be allowed.
It was indicated that generation projects will need to obtain a grid connection permit to ensure that they meet all of the requirements for grid compliance. “This might represent a potential bottleneck”, comments FMF Deputy Director Chris Hattingh, “if the regulator does not process applications in a speedy, transparent manner.”
The FMF regards it as vital that government fully commit to this process, and that it must unfold in an easy-to-understand process. Political considerations, favours and connections ought to play no role in the permitting and licencing process that will, it is hoped, soon begin.

“The laws of supply and demand require that businesses and companies be allowed to interact with, and learn from, the needs of consumers with as little messing with prices by the state as possible,” argues Hattingh.
The momentum offered by this reform should now be exploited to its maximum. The FMF calls on government to abandon policies that will (and some of which currently) inhibit growth and undermine civil liberties, such as:

  • Confiscation of property without compensation;
  • The proposed National Health Insurance scheme;
  • Unduly restrictive labour laws that keep over 11 million South Africans jobless; and
  • So-called “competition” regulations that chase investors out of our country.

“Rolling blackouts – the result of government’s decision to maintain a monopoly on the generation and distribution of electricity – have for too long inhibited the country’s economic potential,” comments Hattingh.

“This policy shift indicates precisely the spirit in which government can remove barriers to innovation, growth, and job creation. More pro-freedom, pro-individual rights ideas and policies will allow South African business to grow and will steadily reverse the country’s 43.2% unemployment rate.”

All that is now required is honest and speedy implementation, and a steadfast commitment to freedom as a generator of wealth creation and prosperity.

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