Electricity minister wants to end Eskom monopoly

Electricity Minister Kgosientsho Ramokgopa has reiterated the government’s stance on reducing South Africa’s reliance on Eskom as the sole electricity provider, with private companies encouraged to compete with the utility. 

Ramokgopa made these comments during an interview on eNCA, where he outlined the government’s progress in implementing the Energy Action Plan (EAP). 

The minister said he is focused on improving the performance of Eskom’s power stations and is also busy adding new generation capacity to the grid. 

Private companies are the predominant source of additional capacity, with many businesses building renewable energy generation facilities. 

It is estimated that a pipeline of over 9,000MW of private renewable generation capacity will come onstream within the next 18 months. 

This is in addition to the Renewable Independent Power Producer Programme (REIPPP) Bid Window 7, which seeks to procure 5,000MW of renewable electricity from private companies. 

The government will also procure battery storage worth 1,200MW. 

Additional capacity of 1,000MW will be sourced from neighbouring countries, Ramokgopa added. 

The minister has reiterated his willingness to procure gas power with 3,000MW from Karpowership’s ship-mounted gas power plants and a heavy fuel plant. 

“We do not want to be exclusively reliant on Eskom,” Ramokgopa said. His ministry is trying to introduce other players to compete with the utility and provide reliable power. 

“Eskom will no longer be a monopoly” but will become a dominant market player. 

Ramokgopa’s comments echo those made by other members of the government. 

Deputy Finance Minister David Masondo said the Treasury does not support a state monopoly in the energy sector and they will not rely only on Eskom to generate energy.

Minister of Mineral Resources and Energy Gwede Mantashe said the government’s “intention is to reform electricity supply from a monopolistic industry to a competitive one”. 

The government aims to diversify electricity generation sources and “remains resolute in ensuring that such an electricity market structure comes to fruition”. 

However, Mantashe added that it would be a mistake to “totally remove the public sector” from electricity generation. 

He said the government must continue to “ensure the energy sector supplies reliable and efficient energy at competitive rates that are socially equitable”.

Back-door privatisation

Efficient Group chief economist, Dawie Roodt, said this is a “back-door kind of privatisation”, with the Treasury forcing Eskom to privatise its distribution network and partially privatise its generation fleet. 

However, this “is not privatisation as policy”. Roodt said the state is collapsing, and the private sector is merely taking over state functions.

The privatisation process will continue, but he warns that it will take 18 to 24 months before significant changes will be seen. 

In the long term, electricity generation will be private, with Eskom merely distributing electricity and the utility being relegated to buying electricity from other entities and selling it on, said Roodt.

This is echoed by other commentators such as Kokkie Kooyman, a finance sector expert at Denker Capital, who called the ANC policy “privatisation by stealth”.