A New Dawn for South Africa
2018 is certainly shaping up to be a new era of transformation for South Africa. With new president Cyril Ramaphosa at the helm of the country spearheading a series of modest but welcome changes, observers are cautiously optimistic about the future trajectory of the country. The Cabinet reshuffle announced on the 26th of February marks a significant step towards restoring business confidence both nationally and internationally, with Ramaphosa highlighting that the new “transitional” Cabinet reflects the need to balance continuity and stability with the need for renewal, economic recovery and accelerated transformation.
“The Cabinet reshuffle brings a breath of fresh air to the energy sector”
The reshuffle brings a breath of fresh air to the energy sector as well, with veteran politician Jeff Radebe having been appointed Minister of Energy. Radebe is South Africa’s longest continuously serving Cabinet member, having been part of every national administration since 1994 and under every post-apartheid President. What this means for the energy sector is still unclear given his lack of industry knowledge, but his longstanding Ministerial expertise, having held the portfolios of Planning, Monitoring and Evaluation, Justice and Constitutional Development, Transport and Public Enterprises, should place him in good stead to revamp the Energy portfolio, which has languished through a few years of stagnation.
Most notably, the industry is still waiting for the finalization of the 2014 amendments to the Mineral and Petroleum Resources Development Act (MPRDA), and the release of the final Integrated Resource Plan (IRP), for which previous Minister of Energy David Mahlobo had apparently sought Cabinet’s approval in December 2017. Both of which are required to provide clarity on the country’s energy priorities and regulatory certainty for domestic and international investors. Other headwinds include the moratorium on shale gas development in the Karoo, and the controversy surrounding the procurement of nuclear energy in the country, which had diverted significant attention away from other energy sources.
Former Finance Minister Pravin Gordhan’s return to cabinet, this time as Minister of Public Enterprises, will also help industry stakeholders and investors heave a sigh of relief as he brings his economic acumen to the country’s ailing parastatals, in particular Eskom (the national electricity utility), PetroSA (South Africa’s national oil company) and Transnet (South Africa’s national freight carrier), all critical players within the country’s energy landscape. His experience serving on the Parliament’s Public Enterprises portfolio committee over the past year leaves him well-placed to execute on this difficult task.
With the global oil price recovering slowly but surely, South Africa has huge upstream potential as one of the last few unexplored ‘frontiers’ on the continent, which has seen an explosive boom in upstream oil and gas development over the past decade, as well as ample opportunities to leverage on its strong infrastructure and expertise to position itself as a service hub catering to the full industry value chain.
With a new Head of State and government driving renewed optimism within the business community, the start of 2018 certainly marks a new dawn for South Africa.
Writer: Karen Xi