On 26 May 2023, Proclamation 121 of 2023 effected the long-awaited transfer of powers under the Electricity Regulation Act 4 of 2006 (ERA) to the new Electricity Minister, Kgosientsho Ramokgopa. President Ramaphosa relied on s 97 of the Constitution, which in clear terms allows the President to transfer the (a) administration of any legislation, or (b) any legislative power or function entrusted in legislation, from one Cabinet Member to another. The Proclamation refers to the transfer of "powers and functions", and is thus aligned with s 97(b) of the Constitution. The transfer is effective from 26 May 2023.
Powers and functions under the critical s 34 of the ERA (new generation capacity), have been transferred from the Minister of Mineral Resources and Energy to the new Electricity Minister. But while the transfer of s 34(1) powers is clear, the President's transfer of s 34(2) is confusing, because it expressly excludes specific powers that are necessary or incidental to section 34(1).
The s 34(1) powers that the Electricity Minister may now exercise include the power to (a) determine that new generation capacity is needed to ensure the continued, uninterrupted supply of electricity, (b) determine the types of energy sources from which electricity must be generated, and the percentages of electricity from such sources, (c) determine to whom electricity produced must be sold, and the persons who are duty-bound to purchase it (the current basis for the Eskom single-buyer model), and (d) determine that new generation capacity must provide for private sector participation and be established through a fair, equitable, transparent, competitive and cost-effective tendering procedure. All of these powers must be exercised in consultation with the National Energy Regulator of South Africa (NERSA).
Section 34(2) deals with the powers that are necessary or incidental to achieving the purposes in section 34(1). The empowering provision in the ERA is broad – the "Minister has such powers as may be necessary or incidental to any purpose" in s 34(1). The provision continues with a specific list of "included" powers, set out in ss 34(2)(a) through (e). The specific powers include, for example, measures necessary to facilitate the tendering process for new generation capacity; acquiring or granting things or rights or obligations (including relevant environmental authorisations), with a view to transferring these to a successful tenderer; and, subject to the Public Finance Management Act 1 of 1999, issuing guarantees, indemnities, or securities or entering into any other transaction that binds the State to any future financial commitment necessary or expedient for the development, construction, commissioning or operation of a public or privately-owned electricity generation business.
Unlike the clear transfer of s 34(1) powers, Proclamation 121 transfers s 34(2) powers to the new Minister (and thus incumbent has such powers as are "necessary or incidental to any purpose" in s 34(1)), but expressly excludes all the specific powers in s 34(2)(a) to (e), which remain with the Minister of Mineral Resources and Energy. Currently, therefore, the Minister of Electricity can exercise the undefined necessary and incidental powers associated with section 34(1), and only the Minister of Mineral Resources and Energy may exercise the specific powers in s 34(2). It is unclear whether the transfer restricts the Minister of Mineral Resources and Energy to these powers.
An optimistic explanation for the exclusion of s 34(2) (a) to (e) from the transfer could be the Presidency's expressed intent for the Electricity portfolio to be a time-limited appointment. There may be a concern that an "Electricity" Minister cannot make long-term financial commitments, when the portfolio may no longer exist in a few years however this cannot be the case since s 34(2) simply refers to the "Minister" and not to a particular portfolio.
A less optimistic explanation is that the exclusion of the s 34(2) powers was a political trade-off, that may undermine the Electricity Minister's powers under s 34(1) in circumstances where the two Minister disagree. A section 34(1) new generation determination may simply fall flat if the facilitation measures under s 34(2) are not implemented.
Despite the uncertainty surrounding the transfer of the s 34(2) powers, there is still potential for progress as it brings the two Ministers together to collaborate for the benefit of South Africa's infrastructure and economy. This collaborative effort holds the promise of significantly reducing load shedding, providing much-needed relief to our population and sparking new energy into the role of the Electricity Minister.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
