South Africa’s leading business organisations have come out guns blazing against electricity giant Eskom for challenging the energy regulator’s approval of five trading licences, saying the power utility is trying to undermine the national energy reform programme.
Business Unity South Africa (Busa) and Business Leadership South Africa (BLSA) urge electricity and energy minister Dr Kgosientsho Ramokgopa to engage Eskom’s board and relevant government entities to secure:
- An immediate cessation of all lawsuits and legal disputes initiated by Eskom against Nersa.
- A public commitment from Eskom to work collaboratively with all stakeholders to fast-track the integration of new generation capacity onto the national grid, in parallel with expanding the grid.
- Clear directives from the appropriate government authorities instructing Eskom to cease its anti-competitive and discriminatory behaviour and fully support the liberalisation of the energy sector.
The two organisations responded to the news that Eskom has applied to the Gauteng division of the High Court to review and set aside Nersa’s approval of five trading and one import/export license granted earlier to Green Electron Market, CBI Electric Apollo, GreenCo Power Services, Discovery Green and Noa Group Trading.
This is only the latest in a long series of legal challenges brought by Eskom against Nersa, many of which relate to the way the regulator has determined Eskom’s tariffs. The utility has, almost every time, come out victorious.
The challenge to the trading licences came despite the fact that traders have been part of the South African electricity supply industry for more than a decade. However, as the liberalisation of the market progresses, the number of companies entering the space has increased significantly.
Since the launch of the challenge last month, Nersa has approved a further two trading licences and two import/export licences, bringing the total number of licensed trader to ten, according to the Nersa website.
The regulator currently has at least four more applications on its table. A public hearing about the applications scheduled for 8 August was cancelled on 6 August, as nobody registered to make presentations.
Traders play an important role in providing smaller businesses access to cheaper electricity in the form of green energy, which is needed to reduce their carbon footprint. This is increasingly a market imperative.
Eskom, in its court papers, argue that Nersa has erred in awarding the licences without having the necessary rules in place and warned that traders will “cherry-pick” the best clients currently buying from Eskom and municipalities, thereby undermining their sustainability.
Peter Attard Montalto, managing director at Krutham, described Eskom’s court challenge as “a failure of the board, of the department of electricity and energy, and of its minister to provide proper oversight, guidance and shareholder guiderails on how Eskom behaves during reforms.”
By calling on government, and specifically Ramokgopa to intervene, Busa and BLSA seem to take the same line.
According to the organisations, “Eskom’s current strategy of litigation and obstruction is directly undermining South Africa’s national goal of achieving energy security. These actions create uncertainty and send a negative signal to investors, delay critical energy projects, and ultimately may prolong the devastating economic and social impact of load shedding.
“Government’s stated policy position is the unbundling of Eskom, encouraging private sector investment in generation and transmission, and creating a competitive market to help solve the energy crisis. Eskom’s actions contradict this policy direction and seek to stall or undermine the reform process. By legally challenging Nersa’s awarding of trading licences, Eskom is actively working to protect its historical monopoly at the direct expense of a stable national power supply,” they say in their statement.
According to Busi Mavuso, CEO of BLSA, “Eskom cannot be both the primary cause of our energy crisis and the gatekeeper of its solution. South African businesses are failing, jobs are being lost, and our economy is stagnating. We need more power on the grid, now. For Eskom to spend public money on litigation designed to frustrate the very reforms government is championing and block the investment that can help secure cheaper and more secure energy is illogical and completely untenable.”
The business formations point to the progress made thanks to industry reforms, which have brought notable investment in renewable energy, with nearly 10 000 new job opportunities created as a result.
“Introducing a competitive wholesale market is essential to unlock an additional 6GW of new private solar PV and 3.5GW of wind by 2030. This represents a further R132 billion in private investment and substantial job creation.”
They accuse Eskom of trying to block this progress, rather than focusing on expanding and modernising the grid.
“Our goal as a nation must be a reliable and affordable supply of electricity for every South African. This requires collaboration, not litigation,” said Khulekani Mathe, CEO of Busa.
“We are calling on Eskom’s board and executive management to align Eskom’s mandate and actions with the reform direction as outlined in the President’s Energy Action Plan and the Electricity Regulation Act. Introducing a vibrant and competitive market that encourages much-needed additional investment is critical for consumers to access affordable, clean power, which is key to longer term energy security and making South Africa globally competitive. Anti-competitive and discriminatory practices undermine the national agenda.”
The organisations state that the era of a single, state-run monopoly controlling our country’s economic destiny is over. To power our future, we must empower progress and encourage investment and job creation, rather than protect the past. – moneyweb.co.za
