The Democratic Alliance’s Bill that aims to end power utility Eskom’s monopoly will ensure that “more economic power” is in the hands of South Africans and not a “corrupt and failing ANC government”, according to party leader Mmusi Maimane.
Maimane was speaking at a media briefing in Parliament on Monday where he introduced the party’s private members Bill — the Independent System and Market Operator (Ismo) Bill — which he described as a “key component” in reviving the economy.
The DA says the Ismo Bill was actually first introduced by the ANC government in 2012 but was withdrawn in 2014 due to the ANC’s “general disinterest and a change in policy”.
The party says at the time, the Bill was touted as what would address the “conflict of interest” that Eskom finds itself in as a generator and distributor of electricity countrywide which is crucial because the DA says Eskom has shown a tendency to “freeze out independent power producers (IPPs), effectively monopolising electricity generation”.
If the Bill had been taken seriously at the time, this would have prevented the embattled state that Eskom is in now because Eskom would only play a role in electricity generation while another independent body handles electricity distribution.
In September, the party presented its seven-point intervention plan to address the recession and revive the economy. One of the interventions was to end Eskom’s monopoly and allow different cities to purchase directly from IPPs, because “Eskom cannot hold us to ransom”.
According to Maimane, over the past decade, Eskom prices have increased exponentially by “about 356%, while inflation over the same period was 74%”. This means that electricity prices have “increased four times faster than inflation over the past 10 years”.
“Eskom is a zombie state-owned entity that is so financially precarious that it could pull our entire economy down with it,” Maimane said.
The escalating electricity prices are due to a “complete lack of competition in the energy sector” with ordinary South Africans hardest hit and small businesses not being able to operate effectively and contribute to job creation.
“It goes without saying that the only way to keep the cost of electricity down for consumers is to introduce competition in the electricity market. Our ISMO Bill aims to achieve this,” Maimane said.
The Bill aims to establish an independent body that is owned by the state and is tasked with buying electricity from electricity generators including IPPs. The operator will then be responsible for selling electricity to distributors and customers at a wholesale tariff.
“ISMO will function independently to electricity generation businesses to ensure fairness between generators, encouraging competition and innovation,” Maimane said.
The DA envisages that the Bill will be able to allow metropolitan municipalities “with a proven history of good financial governance and electricity reticulation management” to purchase electricity from electricity generators directly but with transparency measures put in place.
The next step is for the party to refer the Bill to Parliamentary Legal Services and call for public comment via the Bill being published in the Government Gazette. The ISMO Bill will then be tabled in the National Assembly.
Read the DA’s legislative summary of the Ismo Bill here: