South African electricity utility Eskom will not be allowed to invest in new generation capacity in the domestic market to ensure meaningful participation of the private sector in electricity in the medium term, Public Enterprises Minister Jeff Radebe said in a written reply to a question on Thursday.
But he also said Eskom would retain no less than 70% of the existing electricity generating market sector — although the restructuring of the power parastatal’s generating and distributing functions was being considered.
While he did not go into details, National Electricity Regulator officials this week indicated that South Africa would have to be taking steps soon to build new generation capacity as the country could have power shortage problems from as early as 2007 — if current supply demand growth continues.
This is an indication that government will be looking to the private sector for investment in the region of R35-billion in this area.
Radebe said in reply to a question from New National Party MP Willem Odendaal — who asked whether privatising or restructuring Eskom’s generating and distribution functions of electricity was being considered — that there would be introduction of private sector participation of up to 30% of the existing electricity generating market sector.
The aim was also to ensure that the combined installed capacity owned by Eskom — both internationally and domestically — must not be less than that of Eskom’s current domestic installed capacity.
Radebe is expected to elaborate on the Eskom semi-privatisation measures in his budget speech in the National Assembly on Thursday afternoon. This is expected to include time frames for the semi-privatisation of the distribution and generation functions.
But, he said in the question, distribution would be taken “out of Eskom” and will be combined with local authority electricity distributors in six Regional Electricity Distributors (REDs).
These REDs are to be of an efficient scale, capable of sustained independent financial viability and subject to a common form of regulation — to ensure they can meet the basic needs of all South Africans without regard to history, location, income or social background.
He noted that an Electricity Distribution Industry Holdings Company — to facilitate the establishment of REDs — “is now in place”. – I-Net Bridge