Substantial hurdles still remain in the restructuring of the electricity distribution industry, the Chamber of Mines said on Wednesday.
”Probably the most serious is how to persuade municipalities to relinquish their distribution assets to the regional electricity distributors (REDs),” said spokesperson Sibongiseni Dlamini.
Welcoming the proposed establishment of the six REDs, the Chamber said it had for some time been gravely concerned that draft legislation was deviating from official policy positions.
”This created uncertainty that was detrimental to investment decision-making and consequently had the potential to retard economic development,” said Dlamini.
However, the Cabinet’s approval last week of the REDs was in line with the 1998 White Paper on Energy Policy and the 2001 Electricity Distribution Industry Blueprint Report, she said.
”The Chamber supports Cabinet’s decision and will cooperate as far as possible with government to bring about the necessary changes in the electricity distribution industry.”
Eskom distribution and local municipal electricity utilities are to be amalgamated into the REDs, whose activities are to be regulated by the National Energy Regulator of South Africa.
At the time of the Cabinet announcement, Minerals and Energy Minister Buyelwa Sonjica said fragmentation by Eskom — the main electricity distributor — and 187 municipalities had resulted in an estimated 2Â 000 tariff regimes across the country.
Worst affected were the poor, especially those living in the rural areas.
Sonjica said the REDs would be anchored around the six main municipalities and would also have a business entity.
”It’s difficult to regulate municipalities, but you can regulate a service provider because it’s a business,” she said. — Sapa