Foundation takes aim at 'monolithic' Eskom

The energy market should be privatised and deregulated for the electricity crisis in South Africa to be solved, the Free Market Foundation (FMF) suggested on Thursday.

“One does not have to be an expert on energy to know that what is needed is not better management of Eskom but free competition to which end Eskom should be unbundled into its distinct activities: generating, national grid, distribution, retailing and managing energy markets,” said FMF director Leon Louw in a speech prepared for delivery to the foundation, a policy organisation.

“Once these functions have been unbundled they should probably be further divided into regions and local governments. Either way, Eskom should be privatised and the energy market deregulated.”

Leon was addressing the foundation on the energy crisis which resulted in load shedding and significant losses in the manufacturing and mining sector and inconvenience to households.

He said Eskom alone was not to blame for the electricity crisis. He blamed ministers responsible for energy policy and the National Energy Regulator of South Africa (Nersa).

Nersa imposed conditions that kept competitors out of the market.
Its licensing system meant that companies with existing surplus capacity could not help by selling electricity.

Tongaat-Hulett was not allowed to sell electricity from its generators to the Richards Bay aluminium smelter. Anglo American Platinum mines had also not been allowed to supply the electricity needs of nearby Rustenburg.

Thousands of people with imported generators supplying their own and their neighbours’ needs in townships and informal settlements had had them confiscated.

“They have been the victims of government inspectors going around confiscating generators and prohibiting electricity sales, even in areas where no Eskom or local government electricity was available,” he said.

A medium-term solution was to allow the free acquisition of generating capacity and the freedom to trade electricity, using the national grid if necessary, at an appropriate cost.

The long-term solution was unbundling, privatisation and deregulation. This could be done by way of a massive black economic empowerment scheme, preferably by giving Eskom shares to black, or all South Africans.

“A monolithic energy monopoly such as Eskom is uncommon in the world,” Leon said. - Sapa

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