The Organisation Undoing Tax Abuse (OUTA) has slammed The Draft Integrated Resource Plan 2023 (IRP 2023) as “sloppy, inaccurate, out of date”. OUTA’s CEO Wayne Duvenage says it is so “inadequate that it makes a mockery of the public engagement process”. He warns that if it is not torn up and redone properly, OUTA will go to court. “We need our government to actually start applying the demands when it comes to what is in the best interests of this country, of business, of the economy and its people and the consumers. And they’re not demonstrating that. So what we believe will happen going forward is if they don’t demonstrate that on this specific matter, then they will be hauled off to court.”
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Edited transcript of the interview ___STEADY_PAYWALL___
Chris Steyn (00:02.67)
South Africa’s draft Integrated Resource Plan should be torn up. So says Wayne Duvenhage of OUTA. Welcome Wayne.
Wayne Duvenage – OUTA (00:11.278)
Hi Chris, nice to be with you.
Chris Steyn (00:13.026)
What is wrong with it?
Wayne Duvenage – OUTA (00:16.75)
Well, firstly, it’s a very important document. If we’re going to plan for our energy security, we need to do so very constructively and with assumptions that make sense and with a model that can be accessed by civil society, by others who are scenario planners in the space experts. So we can make head or tail of what their agenda is. And sometimes there is an agenda…the first one was put out in 2011, and this is a document that, if done correctly, does help the country plan for its energy security well into the future, because you don’t just build, take 10 years to build a nuclear plant and find out 10 years later, actually, we didn’t need this or it’s too expensive. You need to be looking at trends, you need to be doing some…you can’t really say accurate assumptions and forecasting because forecasting is forecasting. But you need to really apply your mind and put in quite intricate and complex modelling into these systems. And it goes right down to where the grid is, where it isn’t as well. You can say, well, this is what we need in energy and say, but if you don’t have a grid, then you have to bring the grid in. And all these costs are costs that you and I have to pick up. So what is wrong with IRP23? This is the draft one which, firstly, our frustration with the government, the Department of Minerals, Resources and Energy, takes two years to get this document out. The last one we did was 2019. These should be updated at least every two years because the landscape is changing all the time. And they need to have public consultation and meaningful public consultation, not just a quick tick-box exercise we’ve consulted with the society.
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Wayne Duvenage – OUTA (02:13.39)
The last one that was done, there were road shows. They invited people into the room to discuss, to hear the government’s plan, and to answer questions. They didn’t do that properly, not significantly this time around. And so what happened is they finally got this document together after us and civil society saying, where is the updated IRP? Two years later, they get it out and they give us a month to comment on it, or it’s five, six weeks.
Wayne Duvenage – OUTA (02:41.964)
It comes out on the 4th of January, and they say, give us your comments sometime in the middle of February. That’s unacceptable. This is a complex document. So when we did complain, various organisations and civil society, they extended that to, I think, the 23rd of March, another month. It’s still not enough time. Nonetheless, we’ve made the best of this time. We’ve got our consultants and analysts in with us and started to unpack exactly what’s happening here.
And the first document had to be changed a bit because they had some serious omissions, but it is still very, very weak. The long and short of it is that it is missing a lot of information that is required. The assumptions are outdated, especially costs pertaining to new technology, the trends and pricing models that relate to the costs of new renewables and battery storage are actually out of line. They’re not correct with current pricing models and with projected pricing models where everything is pointing to these costs going down. And remember, it’s important that the objectives, one of the objectives that needs to be met is that this is affordable to South Africa. So the costs are very, very important. You can’t just go in and say, well, we’re going to put in something like Karpowerships and hold the country ransom for 20 years to the liquid natural gas costs and the Rand exchange rate when it just becomes unaffordable and can’t afford it as an economy. So you need to apply costs, you need to look at energy security of energy, and you need to make sure that we start moving into the clean energy space. And what is that demand into the future? And that’s where we found the current document wanting in many regards. It also doesn’t seem to have taken into account the private sector’s own energy development. And it still includes Karpowerships, for instance…It’s got fixed gas prices. It’s ludicrous given the current scenario is playing out in currency exchange and international prices of gas. So far too many flaws in the documents. What we’re saying ultimately is really this is about a public engagement process on a document that is so flawed, the assumption is not clear, not accurate, too much lacking in transparency in some areas. Can you fix these issues which we have – and not only ourselves, Meridian Economics, really experts in the space as well, have put out a great response to the IRP 2023. Look at those responses, look at our responses and other civil society input. Fix this request for a public comment document now and let’s start again because the current one is just a mess.
Chris Steyn (05:52.75)
So apart from it being outdated, it also contained a long list of errors and omissions. What were the biggest errors in that document, Wayne?
Wayne Duvenage – OUTA (06:01.974)
Well, it is around the costs that they’ve assigned to renewables going forward into the future. It is this notion that, you know, the current decommissioning plan of ESKOM’s coal-powered fleet is what it is. We believe it needs to be reviewed and maybe fast-tracked in the space of declining costs in renewables and other ways to get us to our targets of low emissions a lot quicker. So one doesn’t just take the given plan as the given plan on decommissioning, one needs to look at how to use new technology and fast track some of those plans. As I said, Karpowerships are still there. And there’s another element that they put in this plan that says, you know, the draft IRP is still subjected to policy adjustments.
Now, what do we mean by that? Well, this is where politics starts to interfere. Or what are we talking about? Because if you’re going to be opaque or silent on what you mean by policy adjustments, then how do we give input on that? Because those policy adjustments might give rise to a very different final energy plan. So we need to understand what those policy adjustments. And so that’s one of the things we’re also asking for.
And then again, nuclear costs appear to be very low when compared to data that comes in from other planners and experts in the space that say that the cost is not as low as what is made out to be in the IRP. And even under current nuclear construction around the world, we’re not against nuclear at all. We’re against bad decisions and costly decisions that are not in the best interest of…
So we need to have clarity on all of these matters … .For instance, policy changes might say, look, we from a job creation point of view, we’re not going to decommission. We’re going to repurpose and reinvest in coal energy in certain areas of the country. Now, of course, we’ve got to take employment challenges into account, but if that’s a policy decision, we need to know what that is so that the costs of that are factored in. The desulfurization that needs to happen on many of these, in fact, almost all of our coal -fired power stations has to be taken into account because it starts to impact on our international commitments and other agreements that play out in the long run and their costs to those as well. So, yeah, we need absolute clarity on what we mean by policy adjustments.
Chris Steyn (08:00.75)
So if there were policy changes that could actually overrule public participation, could it not?
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Chris Steyn (08:52.55)
Now, how effective is public participation at the moment? I mean, we’ve seen on some other bills that public opinion was ignored to a large extent.
Wayne Duvenage – OUTA (09:12.29)
Yeah, it’s a good question, Chris, because we’ve seen this time and time again, right back to the ethyl days when we started public engagement very often with the government as a tick-box exercise. So, very often, and we see it on this IRP 2023, the laws and the rules say that public engagement needs to be a minimum of X days, 30 days, very often it is. And it doesn’t say that’s what it should be. It just says a minimum of and nine times out of 10 the government applies the minimum. Even on complex matters like this, they apply the minimum. And when there’s an outrage, they’ll extend it slightly. This requires at least three to four months of public engagement and meaningful public engagement. That’s another element that we want to add in. Public engagement needs to be meaningful. That’s in the Constitution. It cannot just be a tick box exercise. So when we got involved in the whole R2 matter, they had public engagement sessions around the country. We went to a number of those. The public that were invited and that were there, were really there for the drinks and the snacks and not to hear what the real issues were. People were missing, big industry players and people that this R2 matter was going to impact were not necessarily in the room at these public engagement sessions. And so what we want the government to start doing far more meaningfully around public engagement, is to target public engagement in a way that you attract and get the players, the role players, the stakeholders into the room and not just say, well, here it is, make your submission. We don’t often know how many submissions they get. And we very often don’t know whether they have applied their minds to the issues that are raised in those submissions from the public and from the various specialists that give input. And so it seems to us that we are wasting our time, that this is just a tick-box exercise and the government is going to say, yes, thank you for your submissions. We took notice of them and we’re going ahead regardless. So we’ve made a couple of changes. They don’t often come back and say, these are the main issues that we grouped. This is how we are going to adjust the program, whatever it is, according to these concerns. We don’t get that type of feedback on most of, in fact, almost all of the public engagement processes with our government.
Chris Steyn (11:47.438)
That’s why some people are losing faith in the public engagement process. They think it’s a waste of time.
Wayne Duvenage – OUTA (11:50.734)
Yeah, and we can’t lose faith. We’d rather put pressure on the government to change it and to do it meaningfully. And that’s where the rule of law comes into play. And we’ve seen this play out in a number of court challenges that we’ve brought, where we have shown the courts that public engagement was not meaningful. It was a tick-box exercise and the judges and the courts are listening to that. And if you can demonstrate to the courts, if you challenge these big matters in court, that the government has not been meaningful around its public engagement, then you get favourable court rulings. And that’s why it’s important for us to use the rule of law to show the government that they need to do this properly.
Chris Steyn (12:35.278)
Now, what does the plan as it currently stands, bode the future of electricity supply in South Africa?
Wayne Duvenage – OUTA (12:42.35)
Well, as it stands now, we want to, the deadline will be reached next week on the IRP 2023. They will hopefully go through the submissions and hopefully they will take cognisance of the extent of and the veracity of the complaints that are coming at them. And we know that because we engage with many energy specialists.
Wayne Duvenage – OUTA (13:08.268)
And we can see that there’s a big pushback on this IRP. So we want the government to do it properly. If they go ahead and forge ahead and we can see that they’ve not applied their minds to a lot of these matters, then I can assure you that matter will be challenged in court. So the message to the government is just take this input seriously. Let’s fix this IRP. We’re not saying we don’t need an IRP. We need a good IRP. Let’s fix it, redo it, take account of the complaints that you’ve received and the constructive criticism, and let’s work with you as a government to ensure that we get the right energy needs for the future of this country and at best cost to society because we ultimately pay for it. And if they want to rush ahead and put out a request for proposals on 2 ,500 megawatts of nuclear energy, before we really know if we need it in the IRP, then that’s the type of behaviour that we’ve also got to stop. So we need our government to actually start applying the demands when it comes to what is in the best interests of this country, of business, of the economy and its people and the consumers. And they’re not demonstrating that. So what we believe will happen going forward is if they don’t demonstrate that on this specific matter, then they will be hauled off to court.
Chris Steyn (14:28.418)
Thank you. That was Wayne Duvenhage of OUTA speaking to BizNews about the draft Integrated Resource Plan, which he believes should be torn up and redone. Thank you, Wayne. I’m Chris Steyn
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