Minerals and Energy Minister Buyelwa Sonjica on Tuesday welcomed Cabinet’s decision to approve the restructuring of the R25-billion electricity distribution industry (EDI).
”Cabinet took a major and indeed historic decision on the 25th October … that we should, as government, proceed collectively and with a sense of urgency to restructure the EDI by creating six wall-to-wall Regional Electricity Distributors (Reds),” said Sonjica, who was briefing industry and government stakeholders, as well as the media, in Johannesburg.
The minister said the Reds would be established at public entities in terms of the Public Finance Management Act, and their activities would be regulated by the National Energy Regulator of South Africa (Nersa).
Power failure and regional tariff discrepancies would be two issues that the restructuring would approach.
The minister said ongoing blackouts, which occurred ”on almost a daily basis across the country” due to lack of maintenance of infrastructure as well as other inefficiencies, were costing between R2,6-billion to R8-billion per annum.
In the past ten years there had been an infrastructure maintenance backlog of about R5-billion, she said.
Fragmentation caused by both Eskom (the current electricity distributor) and the country’s 187 municipalities serving the same customers has ”resulted in a situation where there are an estimated 2000 tariff regimes across the country”.
The poorest, especially those living in the rural areas, were suffering the worst.
”Certainly, given the commitment of this government to eradicate poverty and build a better life for all, the situation could not be allowed to perpetuate any longer,” Sonjica said.
EDI Holdings, a wholly state-owned company, is the custodian of the Reds creation process. At Cabinet last week the restructuring process was given a presidential deadline falling at the end of 2007.
CEO Pinedale Nzimande told the minister on Tuesday EDI Holdings hoped to be able to meet that deadline. — Sapa