By Mzukisi Kota, Partner, Lubumba Kamukwamba, Senior Associate& Lize-Mari Doubell, Candidate Attorney from Webber Wentzel
The declaration of South Africa’s energy crisis as a National State of Disaster may be open to court challenge, as there is already sufficient legislation in place to deal with it
During his State of the Nation Address (SONA) on 9 February 2023, President Cyril Ramaphosa announced that South Africa’s energy crisis “and its impact” had been declared a State of Disaster in terms of the Disaster Management Act, 2002 (the DMA).
The declaration, which was published by the Minister of Co-operative Governance and Traditional Affairs in the Government Gazette, is cold comfort to many South Africans. There is growing skepticism about the government’s ability to address the energy crisis in the wake of a record-breaking streak of rolling blackouts. There are concerns that this extreme legislative measure, which ousts parliamentary supervision over lawmaking, is the appropriate solution to a 15-year-long “crisis”. There are also worries about the potential for fraud and corruption of the kind experienced in the emergency procurement of personal protective equipment (PPE) during the height of the Covid-19 pandemic (when South Africa also operated under a State of Disaster).
Political parties and trade unions such as the Democratic Alliance and Solidarity have already announced their intentions to challenge the declaration before the courts. Other organisations may soon follow. In this article, we explore some of the potential legal hurdles that the declaration and the regulations under it, which have yet to be published, would have to overcome to survive judicial scrutiny.
The legal requirements for a National State of Disaster
A “disaster” is defined in the DMA as: “a progressive or sudden, widespread or localised, natural or human-caused occurrence which- (a) causes or threatens to cause- (i) death, injury or disease; (ii) damage to property, infrastructure or the environment; or (iii) significant disruption of the life of a community; and (b) is of a magnitude that exceeds the ability of those affected by the disaster to cope with its effects using only their own resources“.
Importantly, section 27(1) of the DMA provides that a national disaster may only be declared if: (i) existing legislation and contingency arrangements do not adequately provide for the national executive to effectively deal with the disaster; or (ii) other special circumstances warrant the declaration of a National State of Disaster.
Section 27(2) of the DMA sets out the extraordinary powers which the executive may exercise, including the release of government resources to address the crisis, emergency procurement, and the implementation of a National Disaster Management Plan.
Potential pitfalls of the declaration of the energy crisis as a National State of Disaster
While it seems that the definition of a disaster would be satisfied by the energy crisis, it is highly debatable whether the requirements for the declaration of a national disaster, as set out in section 27(1), have in fact been satisfied.
In his SONA, the President justified the declaration on the basis that it would enable an effective response “co-ordinat[ed] from the centre of government“. The President revealed plans to support businesses in the food production, storage, and retail supply chains through the roll-out of generators and solar panels.
Government plans to exempt critical infrastructure, such as hospitals and water treatment plants, from loadshedding; accelerate energy projects; and “limit regulatory requirements“, “while maintaining rigorous environmental protections, procurement principles and technical standards“. The Auditor‑General will be tasked with monitoring expenditure in an effort to guard against abuses of funds.
The immediate concern that arises from the measures articulated by the president is why their implementation requires the declaration of a National State of Disaster. It seems to us that a strong argument exists that adequate provision has been made in existing legislation to address the energy crisis in general, and to enable the measures articulated by the President, in particular. We discuss some of the relevant existing legislation below.
Electricity Regulation Act
Section 34 of the Electricity Regulation Act, 2006 (ERA) already empowers the Minister of Mineral Resources and Energy to procure new generation capacity to ensure the uninterrupted supply of electricity. Various ministerial determinations are issued from time to time in terms of section 34(1)(b) of the ERA to provide for, among other things, the types of energy sources from which electricity must be generated, and the proportion split across the relevant sources. Section 34(2)(e) also empowers the Minister to “issue any guarantee, indemnity or security or enter into any other transaction that binds the State to any future financial commitment that is necessary or expedient for the development, construction, commissioning or effective operation of a public or privately owned electricity generation business“. The State is even empowered (in terms of section 26 of ERA) to expropriate land, or any right in, over or in respect of land, to facilitate the achievement of the objectives in the ERA.
Recent amendments to the ERA Schedules to remove the 100MW licensing threshold for embedded generation further illustrate the radical measures that can be and have been taken under the ERA to address the need for additional generation capacity in the country and to reduce the amount of red tape.
In our view, the ERA already contains special legislative mechanisms designed to ensure the uninterrupted supply of electricity, and these could be deployed to address aspects of the energy crisis. There is nothing in what is being sought by declaring the National State of Disaster that enables swifter action than is already possible under ERA.
Public Finance Management Act
The PFMA, and the instruction notes issued under it in terms of section 76, also contain special mechanisms for crises. For example, section 16 of the PFMA empowers the Minister of Finance to “authorise the use of funds from the National Revenue Fund to defray expenditure of an exceptional nature which is currently not provided for, and which cannot, without serious prejudice to the public interest, be postponed to a future parliamentary appropriation of funds.” This is an extraordinary power that bypasses the ordinary appropriation of funds through parliament and enables the Minister of Finance to respond efficiently to situation of urgent or emergency need.
Moreover, National Treasury Instruction 3 of 2021/22 provides for a deviation from ordinary competitive tender procedures in an “emergency situation” or “urgent case“. An emergency situation means a serious and unexpected situation that poses an immediate risk to health, life, property or the environment, which calls for urgent action and if there is insufficient time to follow a competitive bidding process. An “ugent case” is a case where early delivery is critical and the invitation of competitive bids is either impossible or impractical, and crucially, not due to improper planning.
The risk of legal challenge
Arguably, the plans outlined at SONA were always achievable under existing legislation, which has adequate mechanisms to enable extraordinary and swift action. The only aspect which is not clearly envisaged is that of the co-ordination pointed to by the President (though this could arguably also be facilitated through mechanisms such as those set out in the Infrastructure Development Act – at least in relation to infrastructure co-ordination). It is in any event most surprising that government requires the adoption of a National State of Disaster and legislation to achieve co-ordination in implementing actions intended to address the energy crisis.
The declaration of a National State of Disaster (and the installation of a new Minister of Electricity) appears to be little more than an attempt to “side-step” addressing the root causes of the energy crisis. These include the lack of co-ordination, co-operation, planning and political agreement between the existing ministries, and the national utility, Eskom. There has also been a failure to implement the existing regulatory framework and policies to eradicate load shedding, infrastructural challenges, and rampant vandalism and looting at power plants. The biggest elephant in the room, as always, remains what is happening on the transmission infrastructure required to unlock various projects which have been orphaned from the REIPP programme due to their inability to connect to the national grid. This issue will not be resolved by the declaration of a National State of Disaster.
It seems to us that the touted legal challenges against the declaration may well proceed on the basis that it does not meet the requirements of 27(1) of the DMA because it has been declared despite the existence of legislation and contingency arrangements to adequately address the crisis. There is also a marked absence of “other special circumstances” to warrant the declaration.
Depending on their content, any regulations and directions still to be published under the declaration may be reviewed and set aside in terms of the Promotion of Administrative Justice Act, 2000 or the principle of legality. Similar challenges were launched during the Covid-19 State of Disaster, such as in the case of Minister of Cooperative Governance and Traditional Affairs v British American Tobacco South Africa (Pty) Ltd (BATSA) and Others. (Webber Wentzel successfully acted for BATSA and the other respondents who initially challenged the tobacco ban before the Western Cape High Court before the Minister’s unsuccessful appeal before the Supreme Court of Appeal).