South Africa Passes a Historic Electricity Regulation Amendment Act - Africa’s premier report on the oil, gas and energy landscape.

South Africa Passes a Historic Electricity Regulation Amendment Act

South Africa’s National Assembly has passed the Electricity Regulation Amendment Bill into an Act of parliament.

The legislation is considered by many experts as the most significant reform of the country’s electricity supply industry since 1923 when Escom was established.

“It will have profound impacts for the sustainability of the power system”, says Anton Eberhard, a Professor Emeritus and Senior Scholar at UCT where he leads the advisory board at the Power Futures Lab at the Gordon School of Business.

“Eskom’s conflict of interest as a generator, off-taker of private power, and monopoly owner and operator of the national grid, will be removed by unbundling the transmission system, guaranteeing fair and transparent access for competing power generators”, Eberhard says.

The unbundled transmission company will have four distinct functions – transmission ownership and operation, system operation (balancing of supply and demand), market operation (trading) and a central purchasing agency that will house legacy and vesting contracts.

Some of those who follow the trend of Africa’s electricity supply industry (ESI) will wonder why there should be any applause for the surrender of public sector monopoly to private competition. Afterall, 19 years after Nigeria passed its electricity reform law and 11 years after a massive sale of generating and distribution companies to the private sector, the country’s ESI hasn’t fared better. Neither generation nor distribution has improved and transmission consistently fails.

Yet, over 3,000 kilometres northwards, Algeria and Egypt, whose ESIs are still firmly state controlled, deliver better access to electricity to their citizens. Algeria has 100% universal access. Egypt has over 98%.

Mr. Eberhard, a fierce promoter of free market for electricity in SA, remarks that the Electricity Regulation Amendment Act is coming to fruition, “26 years after the Energy Policy White Paper recommended breaking up Eskom’s monopoly and five years after President Cyril Ramaphosa’s Eskom Sustainability Task Team recommended the unbundling of Transmission”.

The unbundled company initially will be a subsidiary company of Eskom Holdings, known as the National Transmission Company of South Africa.

Within five years this will be converted into a completely separate state-owned company, the Transmission System Operator SOC Ltd.

 

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