(Adds mines and business councils, details)
JOHANNESBURG, June 10 (Reuters) – South Africa will exempt power generation projects of up to 100 megawatts from licensing requirements, increasing the threshold 10-fold as it looks to urgently stabilise a national grid hard hit by power cuts, President Cyril Ramaphosa said on Thursday.
Ramaphosa made the announcement amid the latest round of rolling blackouts by power utility Eskom, which has struggled to provide consistent supply to Africa’s most industrialised economy.
“This reform is expected to unlock significant investment in new generation capacity in the short and medium term, enabling companies to build their own generation facilities to supply their energy needs,” he said in a televised briefing.
Ramaphosa has said previously that the move could potentially unlock 5,000 MW of extra capacity as part of reforms aimed at ending the country’s power crisis.
Although the projects will be exempt from the licensing requirements of the National Energy Regulator of South Africa (NERSA), they will still need to obtain a grid connection permit, he said on Thursday.
Mining companies have argued red tape has prevented them from generating their own power for years and have lobbied the government for rule changes.
“Our initial estimates are that this development could lead to additional short- and medium-term investment by the industry solely in embedded generation projects of around 27 billion rand ($2 billion),” industry body, the Minerals Council said.
Miner Gold Fields in February won approval for a 40 MW solar plant, four years after it first submitted a licence application, as energy intensive industries look to scale back their reliance on Eskom.
Ramaphosa said the changes will increase the available supply of energy to Eskom, allowing it to proceed with an intensive maintenance programme aimed at fixing its ailing infrastructure.
South Africa indicated in April it would change the licensing threshold to 10 MW from 1 MW but industry experts had hoped for more.
Ramaphosa said the amendment will be published within 60 days, but business collective Business Unity SA (BUSA) urged the government to cut that to within 30 days.
“While this change is well received…every day of delay and load shedding adds to our economic pressures,” it said. ($1 = 13.6417 rand) (Reporting by Wendell Roelf and Tanisha Heiberg; Writing by Emma Rumney; Editing by Kirsten Donovan)