ANC fears losing electricity monopoly

The Electricity Regulation Amendment Bill (ERA) has been delayed in Parliament after meeting opposition from elements within the African National Congress (ANC) that it will weaken the state’s hold on its electricity monopoly. 

Stellenbosch University Centre for Sustainability Transitions co-director Professor Mark Swilling told Newzroom Afrika that the delays in passing the amendments are “very, very troubling”.

The ERA is crucial in setting up an independent transmission company that will enable the creation of an open-access grid with multiple sources of electricity generation. 

The amendments will also create the conditions for the trading of electricity by private companies and enable municipalities to ‘wheel’ electricity within their jurisdictions.

Swilling said the amendments’ passing should be a top priority for the electricity minister Kgosientsho Ramokgopa as it is central to the government’s Energy Action Plan. 

However, the amendments to the ERA have been met with opposition from the minister of mineral resources and energy Gwede Mantashe and other ANC members. 

This may result in the passing of the amendment bill being potentially delayed until after the 2024 elections.

There is speculation that the deliberate delay by Mantashe relates to ideological antipathy by sections of the ANC towards the unbundling of Eskom.

They see it as a form of privatisation, which also explains his reluctance to facilitate the expansion of private power generation.

Mantashe is committed to coal-fired power stations and has dragged his feet in expediting the introduction of independent power producers.

Swilling said there is a fear that the amendments will weaken the state’s electricity monopoly in South Africa by enabling outright competition to Eskom’s generation division.

Fellow energy expert Hilton Trollip told eNCA that Eskom is delaying the unbundling of its transmission and distribution divisions to protect the interests of its coal-fired generation fleet from private-sector competition. 

South Africa’s power supply consists of large, centralised coal-fired power plants whose electricity is transmitted via the grid to its distribution division, which sells to the final consumer. 

Eskom controls this entire value chain, apart from some municipalities that distribute electricity to consumers within their jurisdictions. 

“This kind of setup was okay when we just had big, central coal-fired plants. What has happened in the last two decades is that a whole bunch of other technologies have become available such as gas and renewables, which threaten to upend this system,” Trollip said. 

These new technologies have been trying to connect to the grid through private sector companies but have faced resistance from Eskom’s generation division. 

Eskom’s generation division has historically been the utility’s prized possession, generating most of its revenue and attracting most of its skills and resources. 

It does not suit the interests of the generation division to allow competitors access to the grid. “The generation division simply does not want any competition that threatens its monopoly,” Trollip said. 

To this end, Eskom has resisted the creation of an open-access electricity grid that would allow multiple sources of electricity generation to compete freely. 

An open-access electricity grid will increase investment in electricity generation from the private sector and help bring load-shedding to an end.