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Wednesday, August 29, 2007

Editorial on SA Energy News

Ouch! We've just been mugged. Trevor Manuel and SASOL have got us...again. In the 2006 Budget Speech, Minister Manuel stated that he was considering a windfall tax on SASOL, which was making record profits. Essentially, the windfall tax was a method that would recover the state's historic investment in and subsidy of SASOL. The Minister duly formed a task team to look into the matter, which it duly did and came back with the conclusion that SASOL should pay its dues.

Then, in this month, something dramatic happened. The Minister did a startling u-turn (proving that government ministers can change their minds and adopt new policy) and dropped the bombshell that there would be no windfall tax. The guys and galls at SASOL and PetroSA must have reached for the Dom Pérignon and started singing, "We are the champions - my friends And we'll keep on fighting - till the end." [1]

Predictably enough, the business press have been cheering on Minster Manuel and just generally getting down with the current corporate love affair. The rest of us have been scratching our heads and wondering why Treasury is passing up a fat check. Given the socio-economic needs of the majority and Apartheid's legacy of underdevelopment, some money from SASOL would have been useful. Maybe some of the 30% of us who don't have electricity--literally living in the Dark Age--could have been allowed to see the light.

Why the u-turn? The team at SENSE has figured it out. For the past several issues, we've been noting SASOL's plans for global domination. Hardly a month could go by without SASOL making another announcement of plans to open plant in America, China, Brazil, in fact everywhere but South Africa. We noticed, but didn't make the connection. Treasury also noticed and made the connection (Did someone from the private sector help Treasury make that connection? Any guesses who?). If the windfall tax went ahead, then SASOL would take its cash and technology, both of them born from strong state subsidy, and invest outside of South Africa, thus leaving the country with the prospect of continuing to import oil without increased domestic supply. Can anyone say "balance of payments problem"?

On the same day Treasury did its u-turn on the windfall tax, SASOL announced plans to construct a 80,000 barrels a day plant in the Waterberg, soon to be formally known as a beautiful environmental resource and magnet for eco-tourism.

Hurray. We don't get the money back from SASOL, we damage one of our few remaining eco-hotspots, and get to bear the externalised costs of SASOL's CO2 emissions; SASOL's Secunda plant is the world's top CO2 producer. We are not sure which one is a worse deal; the electricity firesale to Alcan, the SASOL Christmas present, or the R400 billion nuclear programme.

Speaking of Alcan, Rio Tinto mining has bought it for US$38 billion, in cash. Will Rio Tinto respond favourably to Earthlife's PAIA request for the price to be paid for electricity by Alcan? Will NERSA? Don't hold your breath, but watch as the SECCP continues to poke, prod, and march against this secret deal.

Another thing not to hope for is anything visionary out of DME's Energy Security Master Plan for Liquid Fuels, as Richard Worthington notes in this edition. Speaking of visions, Lerato Maregele points out in a biofuels update that Tito has foreseen that maize as a crop for biofuels may push up food prices. Nice to know that they still have the crystal ball at the Reserve Bank. In related news, Science and Technology Minister Mangena has a sweet tooth and is punting sugar cane as the preferred crop for biofuel production.

In the SA Energy Policy & Analysis section, a strong case has been made for the installation of solar water heaters instead of construction of new generating plant. The SECCP is embarking on a project to investigate viable financing of large-scale solar water heating in urban centres.

The good news is that Algeria is going for solar electricity generation in a big way, and that another wind farm is being planned for South Africa.

The really bad news is that the lack of electricity across the continent is hampering African development, as noted by that bastion of progressive, left wing journalism, The Economist.

The next issue of SENSE will come to grips with Peak Oil and Militarisation in Africa. And that's a mugging of note....

Tristen Taylor
Energy Policy Officer
Earthlife Africa Jhb
25th of August 2007

[1] Lyrics from Queen, “We Are The Champions”

Read the entire round-up here.



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