SA scores significant wins in Operation Vulindlela

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President Cyril Ramaphosa.
President Cyril Ramaphosa.

The South African government and business community have lauded the tech achievements made under Operation Vulindlela.

Established in 2020, Operation Vulindlela aims to fast-track the implementation of high-impact reforms, addressing obstacles or delays to ensure execution on policy commitments.

Today, government released an update report on the work of Operation Vulindlela for the first quarter of 2022. The quarterly report outlines the progress made by Operation Vulindlela and the departments responsible for these reforms.

In his weekly newsletter today, president Cyril Ramaphosa says some of the tech wins from Operation Vulindlela include the successful completion of the long-awaited spectrum auction process, the introduction of an e-visa system, as well as the drive towards renewable energy.

Business Leadership South Africa (BLSA) – which is a voice of the country’s largest corporations, major multinational companies and businesses – has also commended the successes scored under Operation Vulindlela.

“The South African economy, like any other economy, cannot function, let alone grow, without efficient and competitive network industries,” says Ramaphosa.

“These industries – which include electricity, water, transport and telecommunications – are the arteries through which the oxygen of the economy runs.”

According to the president, structural problems in these areas have long been cited as some of the main constraints on SA’s economic growth.

“Inefficiency and the high cost of network services are an impediment to doing business in the country,” he says.

“Across government, our focus is on reforms that are fundamental and transformative; that reshape the way our economy works. This includes the auction of high-demand spectrum for mobile telecommunications, which was delayed for more than 10 years and finally completed in March.”

#DataMustFall after all

Ramaphosa notes the release of new spectrum will improve connectivity and bring down broadband costs.

In March, telecoms regulator the Independent Communications Authority of South Africa confirmed the “successful” conclusion of the long-overdue high-demand radio frequency spectrum auction, saying the process netted the national fiscus R14.4 billion.

Busisiwe Mavuso, CEO of Business Leadership South Africa.
Busisiwe Mavuso, CEO of Business Leadership South Africa.

The auction process, described as a historic moment in the telecoms industry, marked the first time in 17 years that spectrum had been released on a permanent basis in SA.

With the successful spectrum auction, it is expected SA’s mobile operators will be able to expand next-generation technologies such as 5G, while it will also result in the cost of mobile data going down.

Busisiwe Mavuso, CEO of BLSA, comments that the Presidency and National Treasury joint team, Operation Vulindlela, has notched up some significant wins.

“We now have the spectrum auction done. This was first mooted over 14 years ago; however, various implementation challenges tripped it up over the years. It has materially increased the spectrum available to cellular operators and will go far to improving access to data across the country,” says Mavuso.

“It [spectrum auction] also raised a higher than expected R14.4 billion in revenue for the fiscus. It happened because president Cyril Ramaphosa and Cabinet colleagues focused on getting it done. Vulindlela cajoled all parties into alignment for it to succeed.”

In the energy sector, Ramaphosa says there are a number of important, interconnected reforms that are under way to change the way the country generates and consumes electricity.

Milestones include the raising of the licensing threshold for new generation projects to 100MW, allowing these projects to connect to the grid and sell power to customers, he says.

“We have revived the Renewable Energy Independent Power Producer Procurement Programme through the opening of new bid windows.

“Changes to the regulations on new generation capacity have allowed municipalities to procure power independently for the first time. And legislative reforms will ultimately give birth to a new competitive electricity market, supported by the publication of the Electricity Regulation Amendment Bill and the work under way to amend the Electricity Pricing Policy.”

Splitting up Eskom

According to Ramaphosa, the process of unbundling Eskom is on track, with the entity meeting its December 2021 deadline for the establishment of a National Transmission Company.

“By December this year, we hope to complete the unbundling of Eskom’s generation and distribution divisions.”

Mavuso says while it is hard to appreciate in the current load-shedding environment, there have been material wins in restructuring the electricity sector.

She notes Vulindlela has supported the separation of Eskom internally into three distinct units for generation, transmission and distribution.

“This is an important first step to setting up a fully independent transmission systems operator that can procure electricity from the lowest cost producers. While the next stages will take time, the progress so far shows it is on track.”

For Mavuso, energy procurement has also had successes, though it is a mixed bag. She points out the independent power producers programme was put back on track after years of delays and has conducted a fifth auction round and begun a sixth.

“However, there have been challenges in achieving financial close on projects that have been selected in round five, through a combination of bad policy around localisation and changing market conditions.

“The other disappointment has been the ‘emergency’ procurement round that bizarrely resulted in very expensive 20-year commitments to buy electricity from floating power ships that have been tied up in litigation since.”

Ramaphosa added that a fully operational e-visa system has been launched in 14 countries, including some of South Africa’s largest tourist markets.

He notes that a comprehensive review of the work visa system is taking place to enable the country to attract the skills the economy needs.

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