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BRICS SUMMIT

Ramokgopa inks deal with Chinese firms to fix energy crisis – and urges them to ‘work with speed’

Ramokgopa inks deal with Chinese firms to fix energy crisis – and urges them to ‘work with speed’
Minister in the Presidency for Electricity, Dr Kgosientsho Ramokgopa discussing Green Energy Funding with the CEO of the Industrial Development Corporation of South Africa Mr TP Nchocho, President of China Africa Development Fund, Mr L Song and President of Energy China, Mr X Qiao at the BRICS Precinct in Sandton [Photo: GCIS]

In a move that began to take shape in June, South Africa has turned to several Chinese entities to lead a quick fix for load shedding and help Eskom slash emissions.

Electricity Minister Kgosientsho Ramokgopa signed a joint memorandum of cooperation (MoC) with eight Chinese power companies on Wednesday to help South Africa solve its energy crisis and advance its energy transition.  

Speaking at the signing ceremony on the sidelines of the BRICS Summit in Sandton, Ramokgopa said the deal with the Chinese companies underscores the deepening of South Africa-Chinese cooperation in the energy sector. The eight companies have technology that can help Eskom to reduce emissions while improving performance at its coal-fired power plants, he said. 

He added that the Chinese firms had also agreed to help Eskom in developing its transmission and distribution infrastructure. 

“I am more than confident that South Africans are going to see the benefits of this relationship when we end load shedding – and we will end load shedding,” said Ramokgopa.

Ramaphosa China Xi energy

President Cyril Ramaphosa and Chinese President Xi Jinping observe the signing of the memorandum of cooperation in Sandton on Wednesday. (Photo: GCIS)

The eight companies are the State Grid Corporation of China (SGCC), China-Africa Development Fund (CADF), China Energy International Group (CEIG), China General Nuclear Power Corporation (CGN), China National Electric Engineering Company, Huawei Technologies, TBEA, LTD, and Global Energy Interconnection Development and Cooperation Organisation (GEIDCO). 

Ramokgopa said the MoC had been in the works since he visited China in June 2023. According to a version of the MoC released to the media, it will remain in effect for three years, with an option to renew it for an additional two years.

Wednesday’s MoC signing comes a day after Chinese President Xi Jinping’s state visit to South Africa, the morning before the BRICS Summit began. His rare venture outside China is an opportunity to cement relations with Pretoria – China’s key partner in Africa.  

Reporting back on his closed meeting with Xi at the Union Buildings on Tuesday, Ramaphosa revealed the Chinese government had donated R167-million in emergency power equipment and made available a grant of about R500-million as developmental assistance, to help South Africa out of its energy bind. 

Ramokgopa Chinese firms

Electricity Minister Kgosientsho Ramokgopa at the signing ceremony with eight Chinese in Sandton on Wednesday. (Photo: Victoria O’Regan)

“Energy cooperation with China is a recent development that we look to deepen, particularly in line with our respective commitments to low-carbon, climate resilient development,” Ramaphosa said. 

Read more in Daily Maverick: Tough Love Triangle: While Ramaphosa focused on Xi, Modi threw a tantrum and refused to get off his plane

During Xi’s visit to the Union Buildings, Ramokgopa signed a Framework Agreement on Cooperation in Green Energy and an Exchange of Letters between South Africa and China on the donation of emergency energy equipment. 

Speaking on Tuesday, the minister said the “donations are not attached to any conditions”.

He said the donation will assist in providing uninterrupted power supply to more than 500 public facilities in the country, including clinics, hospitals and police stations. 

South Africa is enduring its worst year for power cuts by the monopoly energy utility Eskom. (To track the days and stages of rolling blackouts in South Africa, see The Outlier.) The country is currently experiencing load shedding at stages 1 and 3. 

Speaking at the signing ceremony of the MoC, Ramokgopa said he had impressed upon the heads of the eight Chinese firms that they needed to “work with speed”.

The chairperson of the China Africa Development Fund, Song Lei – who was among the signatories of the MoC – suggested South Africa should streamline bidding and tender processes and relax BEE regulations to be more efficient. 

President Cyril Ramaphosa and Chinese President Xi Jinping at the BRICS Leaders Retreat at Summer Place in Hyde Park, Johannesburg, on 22 August 2023. (Photo: GCIS)

“If we stick strictly to the current bidding and the tendering framework, it might be difficult to be very efficient. So I suggest further organising and streamlining the bidding and tendering procedures, especially emergency and major power projects. Consider allowing direct participation of Chinese power enterprises through integrated investment, construction and the operation models,” said Lei. 

The value of grid expansion is going to run to hundreds of billions of rands. Daily Maverick has reported South African business was concerned about losing out to Chinese corporations in the large-scale roll-out of renewable energy infrastructure. 

Responding to questions on Tuesday about whether he will engage with the other BRICS nations on energy-related issues, Ramokgopa said South Africa would engage with other countries to further cooperation in the energy sector.

“This is not restricted to them [China], it’s just that they’re moving fast.” DM

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Comments - Please in order to comment.

  • Jon Quirk says:

    I wonder what the Chinese will make of the politically connected, deeply embedded criminal consortia and sub-standard coal suppliers that are arguably the most intractable stumbling block, and what they will make of Mr Mantashe as they get to grips with this issue?

  • Neil Rex says:

    I just hope he checked the clauses relating to spares and support carefully. Let us remind him of Transnet and all the locomotives that are standing idle.
    I do not see that this was raised in any of the bilateral meetings. If we could get our goods to the ports would be a far bigger boost to our economy.

  • Miles Japhet says:

    There is no such thing as a free lunch!! However, they may help in the dismantling of economy crippling BEE regulations as an upside for the country.

  • Kevin Schaafsma says:

    It would be nice if Mr Jinping would remind Mr Ramaphosa that China has a death penalty and it routinely executes corrupt politicians and businessmen. If SA is going to receive anything from China it must be in accordance with China’s laws and China will want any corruption linked to their aid dealt with in China.

    • James Francis says:

      China only pursues corrupt politicians as a means to purge opposition. It is more than happy to facilitate the ANC’s corruption. Just go see how it behaves in other African countries. This deal is bad. It will bail out the ANC, make them look like heroes, and accelerate our downward spiral. Our only hope is that the ANC is SO corrupt and useless they even get in the way of the Chinese.

  • Mike Blackburn says:

    I’ll wait with bated breath to see what China demands on the basis of these “donations”. There is no such thing as far as China is concerned. Everything has a price.

    I’m also going to practice my “shocked” face for when the inevitable corruption and kickbacks come to light.

  • Graeme de Villiers says:

    And there it is, ladies and gentlemen: ‘If we stick strictly to the current bidding and the tendering framework, it might be difficult to be very efficient. So I suggest further organising and streamlining the bidding and tendering procedures, especially emergency and major power projects’
    So the bending of the rules to allow a mass influx of Chinese labour then?
    And what does this all suddenly mean to the Karpowership backhanders that have no doubt already been received?

    • Thinker and Doer says:

      Yes, indeed, very good questions! They probably will still push to have the karpowerships as well as all of the Chinese investment, to benefit the ruling party and cadres as much as possible! The Chinese government certainly expects their companies to ultimately benefit signficantly, and they often demand the sole use of Chinese expertise and labour, and so there will be no skills transfer or benefit for South African companies or South African workers.

  • henning says:

    Predictable. First you mess Eskom up, then you get Chinese companies to take away South African jobs in fixing the mess. Because ‘we have to work fast’. It’s treasonous. That’s all. The wholesale sell-out of the South African economy. No systems thinking, only patching-up and pandering to geopolitics. What a bunch of morons we have, ruling this country. Completely clueless. No vision. Only panic management. With elections coming up.

    • The anc, I refuse to capitalise the bunch of criminals, need to be ousted as a matter of urgency. Hopefully that will happen in 2024 otherwise this country will be another Zimbabwe within a year. GO DA. Save us. The Republic of the Western Cape, sounds good. Just get rid of the corrupt anc and the mentally challenged eff morons. Push them out of the Western Cape

    • Theresa Avenant says:

      @ henning. I believe that the current government is still captured and is hence, totally incapable of fixing the state of energy in SA. I think it’s about time the SA government started listening to people who have proved their worth in the energy field. I regard President Xi as the best leader China has ever had (in my lifetime anyway – and I am very old). He is a very smart man. Yes, China still has a poor human rights record but nothing like the abject poverty and squalor, crime and corruption we have here in SA. I have a child who fairly recently spent three years working in China so I am influenced by their experience. China does not have an unemployment problem. Government jobs are made available for people who can’t find work. There is very little (if any) crime in China because everyone gets caught and punished. Xi has introduced major reforms to boost its economy. They have even started working to reduce climate change and pollution in China. China is very capable of helping SA to fix its energy crisis. The Chinese are extremely skilled and efficient. Who else is SA going to turn to? Russia’s Putin? – oh please! and America?! with no strings attached? Now really! “it’s treasonous. That’s all. The wholesale sell-out of the South African economy” – I don’t think so. Our government sold out on the SA economy a long time ago. As for panic, of course the ANC is in a state of panic. They have an election next year.

      • Steve Davidson says:

        The New Mao the best leader China has had in your long lifetime? You’re joking aren’t you. Maybe don’t believe your obviously brainwashed daughter and stop repeating lies about them not having an unemployment problem when we read that something like over 20% of their employable youth are jobless. Remind us how Xi’s covid lockdown has been a total failure. Tell us about how their property industry is going to the dogs and their biggest developer is facing bankruptcy. And of course tell us about the Uyghurs being reprogrammed. Wake up and do some research. Xi is an idiot. A communist one, like the rest of them.

      • Hari Seldon says:

        Actually the Chinese economy is starting to unravel and has deep seated structural problems – both economic with a pending property crisis and stagnating growth, and demographic with an ageing population. Unemployment is growing. Autocratic rule is a great risk and historically has scuppered China in the past and will do so again. This is just a sell out of SA manufacturing and jobs to China at a cost. They are not going to help develop the energy infrastructure for free, and Chinese companies in Africa are highly highly corrupt. The model is to extract wealth from African countries through easy money upfront but thats linked to resource extraction down the line. Chinese convicts and cheap labour are brought in to do most of the work denying locals jobs, and they also circumvent import controls. The Chinese are NOT in Africa out of the kindness of their hearts – its to extract wealth back to China – and usually at a far greater cost in the long run than just having proper contracts with Indian, European or American companies. Case in point – the corrupt purchase of locomotives for Transnet from China and now they refuse to supply spare parts.

  • James Francis says:

    So much for developing a local industry and getting a boost from energy development. China is bailing out the ANC, and will make a hero of the party destroying our country. SA is doomed. I see no future here anymore.

  • David Katz says:

    All government procurement processes followed including bbbee

  • Hermann Funk says:

    “I am more than confident that South Africans are going to see the benefits of this relationship”what he means by South Africans is the ANC. It is the latter whose pockets will be filled.

  • Fanie Rajesh Ngabiso says:

    Let’s face it, our government needs help. They are the masters of fokol.

    They are too insecure to use local skills, and the alternative is implosion.

    So frankly I’m good with Chinese assistance if it helps turn this country’s economy around, educates people and opens their eyes to how useless the ANC actually is.

  • alison ellard says:

    The ANC create the problem, cant fix the problem, but congratulate themselves when they have to get another country to do it for them.
    Lets see how the ANC reacts when the Chinese close the feeding trough.

  • Denise Smit says:

    What is a R160 mil donation or a R500 mil loan in the scheme of things. We spend R3 BILJON a month on diesel. Western Cape Dept. of Health has spent millions more on solar and other solutions for their hospitals and clinics. The ANC can not make sums except for that coming into Luthuli House. And the Chinese head of state get SA honor award. The ANC can not meet eye to eye with the West who gives much more to SA than China and Russia, but it feel comfortable with the good mannered Chinese. The Chinese do not eat meat they eat dog or pork. How much avokados are used when they prefer rice. Denise Smit

  • Dave Martin says:

    I’ve spent quite a lot of time in China and the speed and quality of their engineering work is mind-blowing. It will be interesting to see how the Chinese “can do” and “do it now” culture interacts with our red tape.

    I’m so, so tired of every interaction with China being seen as sinister. We as a country should be happy that we’re getting help from by far the greatest infrastructural development nation on history. From purely an engineering perspective, what China achieved in the last 30 years surpasses anything previously done by humans. In just 3 years, China poured more concrete than the USA poured on the entire 20th century. Bridges, roads, dams and most relevant to us, the fastest expansion in electricity infrastructure in human history. China installs the equivalent of South Africa’s entire electricity system every 6 months in solar panels alone!

    • Hari Seldon says:

      That’s very true – but that is within their own country. As soon as they move into African countries the intention is not infrastructure development to benefit the country’s population – its resource extraction with China as the long term beneficiaries at the expense and to the detriment of the country providing the resources. China will not help develop our own manufacturing capacity – they will want to manufacture in China and sell it to us or bring Chinese labour in to do the construction using Chinese products. This is the problem when they move out of China.

  • Frank van der Velde says:

    As we have shrugged off the yoke of British Colonialism, we take on the even bigger burden of Chinese Colonialism

  • Andrew Molyneaux says:

    Two questions – Has the Minister in place a mandate to exclude SA Companies in favour of China Companies, and secondly is the ANC Cabal aware of the fact that the Chinese Legal Systen rewards corruption with a death sentance swiftly executed !!!

  • Geoff Krige says:

    This article and the comments (mainly the comments) leave me somehow very saddened. I am saddened that the anti-apartheid movement and the apartheid government in its later years started the destruction of the South African manufacturing capability. I am saddened that the ANC government has almost completed the destruction of our manufacturing capability to the extent that outside help is desperately needed. I am saddened that there seems to be no component of rebuilding a local manufacturing capability in this agreement. I am saddened by the fact that an outside nation recognised the damage being done by BEE as had been painted out by local manufacturing for years. But mostly I am saddened by the negative and abusive vitriol in so many of the comments largely be people of European descent. Why should China not assist with the development of South Africa in exchange for mineral resources, exactly as the British colonial power did? Why should China not send Chinese professionals to oversee development work and ensure proper application of loans, exactly as the British colonial power did? Is this where liberal South African thinking is at – praising all the motives of the British colonial power, but ascribing the worst possible motives to the Chinese colonial power? The ANC has messed up. We need help. Let’s be thankful that here is help offered and let’s accept it and make to most of the opportunity to move forwards

  • Jane Crankshaw says:

    So now it starts – we will lend you the money as long as we are your only supplier! Next we will be bending over to get shafted!

  • Scott Gordon says:

    Missed the plot here .
    Donation of off the rack old stuff , and the cash loan , in Yuan or $$ ?
    Dudes , Arms Deal , China Rail 🙂 not settled 🙂
    So it is a done deal all BEE compliant , 25% shares ? Etc . Just signed off now .
    Local guys ? Shafted ! I would complain .
    Not out to tender ? ‘ Emergency Rules’ 🙂
    China will come in , and fail . Then leave . Where is the payback ?
    All new lines ? R20 billion ? Will want rent . No free lunch , ask Sanral !
    Still , many Chinese over here . Need the tech guys , have to live somewhere . Need chinese schools .
    The deal for hospitals might work , for a time , whenever .
    We sell iron for the Chinese to sell us a transmission grid ?
    As for Jon Q below , China has been paying the price of cutting off Aussie coal , that their plants were designed to use , does not work at Escom either !
    MOU means nothing , see what Con court says in an year or 3 🙂
    Build huge lines for what ? Where ?
    Guess we might get a new nuclear power plant , thanks JZ .
    As for the dissenters , . Old comrades die in plane crash , or other places .
    As below , Triads have been around . How they work within the CCP , another question ?

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