Search Stafford's blog

Saturday, December 15, 2007

What to do? Part 1

I commented below about the 3 areas of frustration and concern re South Africa (see below). I must have received 40 emails ranging from absolute agreement to those telling me to stop complaining and being negative. Ok - here are my takes on those three areas and what I would do if I had the power that Robert Mugabe yields ;)

Electricity - the load shedding debacle;

1. Renewable Energy - Wind and Solar only

1.1 Immediately halt and review Government/parastatal activities to date - I would investigate exactly what we have done to date. I know that we've been working on wind and solar - surely there's some useful data there. This data would be published in the public domain, free to all, and established assets purchased/built/invented put up for sale at ZERO profit margin to interested startups and investors - South African companies and individual enterprenuers would get preferential discounts.

Note: I would announce that Eskom will no longer be involved in any renewable energy projects in South Africa but would only be required to invest in the connectivity to its' grid - Eskom would be labeled a legacy "sunset energy provider" ensuring the country and world knew that South Africa is serious about the implementation and usage of alternative energy.

1.2 Ratify government's position, involvement and assistance - I would announce a partnership between Dept of Public Enterprises, Dept of Finance, Dept of Environmental Affairs and Eskom that have jointly compiled the "Carbon Tax Credit, Emission reduction and Energy Reformation Act" CTCERERA (pronounced ke~te~ra)- aka; a subset within the South African version of Kyoto...or at least an area of Kyoto South Africa would conform to and personify:

1.2.1 The act would outline that government is exiting ANY personal/direct involvement (i.e. government will not physically build, invest, require ownership or involvement of any business establishing a presence in this area) in the establishment of research and facilities but rather have published safety and security guidelines associated with these areas (similar to what Eskom has to comply with - nothing special or too regulatory).

1.2.2 The act would outline several tax incentives/structures for startups and investors wishing to establish themselves in this area of renewable energy. (Note: This industry would be established as a tax free island within the South African economy! For the first 5 years all companies would not be liable for ANY tax whatsover - this would range from the indidividual PAYE tax all the way through to customs and importing tax.)

1.2.3 The act would outline several tax incentives/structures for individual family usage, small business usage, and enterprise usage (Note: this would need some serious thought regarding usage scales and intensity of coverage offered but at minimum a 100% tax claim in ratio to usage will be implemented)

1.2.4 The act would outline Eskom's investment in assisting renewable energy startups to gain access to their grid and they would have a quota to conform to annually.

1.2.5 Government would announce a startup VC fund of R1 billion available per annum for the next 5 years. This R1bn would be deposited into a selected private sector VC firm who would manage the qualification of access and distribution of these funds. The selected firm would publically declare their margin structure relevant to initial allocation and longer term returns relevant to a startups success.
Their performance would be reviewed quartely by a multinational auditing firm and a a majority metric would be based upon a satisfaction measure accessible to the participating startups they have selected.
They would have to ensure that they have several leading worldwide renewable energy scientists on their board.

(Note: This is not only a VC fund but also a fund accessible for R&D projects)

1.2.6 Incentives for international skilled labour to enter the country - there are only about a thousand leading scientific minds in the photovoltaic world - the act would outline this list of individuals and provide them with extraordinary incentives to move to South Africa (ie Free land, no tax, large salaries, security detail and everything educationally their children would need). Again, their benefits are not perpetual but based upon a quartely review of the startup they're involved in.

1.2.7 The act would outline preferential benefits to companies that actually manufacture their equipment in South Africa - at minimum assembly would be required locally. (Note: Again we would provide tax incentives that would make manufacturing the cells and other commodities locally such a no-brainer)

(Note: tax incentives would require extensive review and detail but these are just the obvious ones that glare at me)

1.2.8 Establishment of large scale solar plants and wind farms - private sector companies/consortiums that wish to establish large scale capture footprints would be provided with a tailored support and incentive structure.

1.3 The Renewable Energy BBBEE Charter - it will NOT exist for at least the first 10 years! We will ONLY require that all companies in this sector deposit 10-15% of their quartely profits into tertiary education institutes and support initiatives to electrify rural and poverty stricken locations. The universities and colleges will be those that provide education in their particular field of sciences. The % allocation of the funds will be decided upon by an established board representing all of the major universities per province NOT ANYONE in government. (Government will recommend that funds are deposited predominantly outside of the established provinces (ie Gauteng/Western Cape/KZN) and that bursaries are made available to ONLY township based students - but only a recommendation!)

Note: We don't want our new renewable energy sector bogged down trying to figure out how to make 5 people in the country richer, ensuring their receptionist is not white and they're buying toilet paper from black owned businesses only! We all know this is not sustainable - let's rather ensure a broad based skills development and upliftment programme in the hands of those that actually educate!

This act would be far reaching and extensive - I'm just throwing up some thoughts. I'm focusing heavily on solar here - wind is extremely viable for South Africa and then there's also the usage of hybrid vehicles...etc.

What do you think? - maybe we should create a South Africa Renewable Energy Act Wiki?

Please jump in!

P.S. The other two areas - I'll post re them later ;)

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