Page 98 - Risk Report 2024

1. Functional State 2. Politics

Blurring of governance lines between the State (as shareholder On-going, long-term energy provision depends on clear energy
influenced by the ruling party), and Eskom’s management policy, as well as balancing of future needs with climate change
is a cause of the energy risk, exacerbated by organised and impacts. Inter-Africa relations might be viewed separately
socio-economic related crime (network equipment theft and from other international aspects, although international
sabotage), which impacts the ability to consistently supply water and energy investments in Africa may preclude SA from
electricity. Policy decisions have a long-term impact on future pursuing some of its planned opportunities, if not adequately
electricity and energy supply. Energy infrastructure such as understood. Geopolitical volatility and uncertainty impact
power lines, underground gas pipes, switching stations, and energy in the short-, medium- and long-term. In the shorter
distribution networks, are extremely vulnerable, while lack of term, projects already proposed should be expedited and
maintenance and aging infrastructure lead to failures. Non- maintenance of existing energy supplies must be prioritised.
payment/collection for energy by municipalities impacts Wars, political unrest, riots, strikes, and disruptive events
the financial sustainability of utilities, and robust collection impact commodity prices, and the availability of strategic
methods often lead to civil unrest. Loadshedding and other spares (especially for the energy sector) which cause price
energy disruptions such as breakdowns, contribute to increases and volatility. SA’s energy policy is developed in
consumers becoming prosumers (generating and using their silos, often playing out in the public domain, thus increasing
own energy) which exacerbates the financial sustainability fragmentation in the sector. Key risks include untaken
risks to energy players. opportunities (e.g. green hydrogen). Policy changes, should
political shifts occur and energy affordability decline, will
continue to impact the vulnerable in society.

3. Economy 4. Social Security
Africa is rather important in SA’s energy mix from the Many small business and individuals have made costly
importing and exporting of electricity to the oil, water, and alternative arrangements for the supply of power to continue
gas aspects both for current and future supply. SA’s ability to working – this has impacted their cost of production and has
manage International Relations and investment opportunities not necessarily been offset by increasing margins. As the cost
will be key and could impact inter-Africa relations. Energy is of grid power and alternative power options increases, the
directly linked to economic growth and is traded regionally. overall impact on such entities will be more severe. Increasing
Thus, a severe economic decline would severely impact energy utilisation of solar power and generators has led to a reduced
supply and demand, the ability to pay for services, and affect demand for supply of energy from the national provider but
the entire SADC region. Loadshedding is already impacting the impact on peak hour consumption is still a challenge,
economic growth, with severe knock-on impacts on other areas which may be cushioned to only some extent by battery
in society, such as unemployment, and should it deteriorate, power, as this technology is still in its infancy. Climate change
would further slow economic growth and associated risks will aspects will impact quality of life specifically around water
materialise. supply, emissions, and extreme weather. Energy provision has
the potential to improve quality of life, provide employment
and stimulate economic growth.

5. Rule of Law 6. Water
Crime impacts energy supply at many levels from strategic Water is required for energy production in many energy
planning to purchasing and contract manipulation at supply technologies and thus a lack of water will have significant
stations to localised power theft and cable theft. Illegally impacts on operations and/or efficiency of energy supply.
tapping into power supplies leads to overloading and failure of The amount of water necessary to run many power stations
infrastructure and non-payment for services further increases is significant and balancing the need to supply energy with
the cost of supply. High crime levels hamper law enforcement the need to supply for individual consumption may become a
agencies to effectively focus on all categories of crime. The challenge. Infrastructure maintenance to manage water supply
inter-relationship between failing SOEs and a lack of political and storage and to avoid leakage is critical in the short term.
will to set policy across entities and integrate the various
needs of our country rather than to support select areas or
individuals remains a significant risk. Fraud and corruption are
major drivers of this uncertain environment. This, together
with parochial interests in decision making, is closely linked
to the lack of implementation capability and political stability.
This impacts on investor confidence, national competitiveness,
and economic growth.