South African Federation of Trade Unions (Saftu) general secretary Zwelinzima Vavi believes the Electricity Regulation Amendment, approved in the National Assembly this week, is in line with the unbundling and dismantling of Eskom. Picture: Itumeleng English/Africa News Agency (ANA)
The South African Federation of Trade Unions (Saftu) has rejected the Electricity Regulation Amendment (ERA) Bill, which the National Assembly approved this week.
The bill was passed through a majority in the National Assembly on Thursday.
The bill seeks to amend the Electricity Regulation Act of 2006 and enable the transformation of the country’s sector to ensure electricity sustainability, supply and affordability.
It also proposes an end to the monopoly-driven market and allows competition through key legislative reforms.
The Portfolio Committee on Mineral Resources and Energy said this move is underscored in the Department of Public Enterprises’ 2019 roadmap for Eskom in a Reformed Electricity Supply Industry.
However, the committee added that the bill does not propose the privatisation of Eskom, which the majority of participants in the public hearings said they opposed.
The committee added that the bill proposes the establishment, with five years, of a state-owned Transmission System Operator (TSO) that was legally distinct from Eskom, the expansion and alignment of the powers of the National Energy Regulator of South Africa (Nersa) to regulate the competitive market and the empowerment of Nersa to set and approve tariffs and prices, as well as regulate the participation of independent power producers (IPPs), among other things.
But Saftu general secretary Zwelinzima Vavi said the federation noted that the bill establishes a framework for the creation of the transmission company and the market for energy generators. Vavi said the creation of the market for electricity generators through the establishment of the TSO, and a central purchasing agency, are aimed at furthering the objectives of privatising energy provision in this country.
“The bill provides a legal framework for the proliferation of IPPs, which will, in line with the plans to unbundle and dismantle Eskom, produce 66% of South Africa’s electricity by 2035 (according to Eskom’s projection presented to the Presidential Climate Commission). They have planned to decommission Eskom’s coal fleet without investing heavily in its renewable capacity. The idea is to replace Eskom’s dominance by having IPPs dominate the production of electricity through renewables,” said Vavi.
Vavi said furthermore, the bill seeks to “allow for a reasonable return commensurate with the risk”. He said this means the tariff structure that will be adopted must guarantee the generators of electricity, many of whom will be IPPs at the end of the unbundling of Eskom, profit.
“If the risk is higher, then the profit should be higher, and if the risk is lower, the return should be lower. To make higher profits in the context of a higher risk, electricity will have to be sold at higher tariffs to the consumers. Higher tariffs increase energy poverty, as the increase in electricity prices since 2007 has shown,” said Vavi.
He said Saftu rejects the risk-return-oriented tariff, adding that the downward pressure on electricity prices that is presumably going to be dawned by the liberalisation of the energy markets will crumble, primarily because of profit-guarantees encapsulated in the “reasonable return commensurate with the risk”.
“Secondarily, the energy market will inevitably concentrate and centralise, leading to the creation of oligopolies and monopolies that will mark prices up. Saftu reaffirms that our solution to the energy crisis and the future of energy has to be a public pathway solution, opposing the liberalisation of the energy generation market, the unbundling and the dismantling of Eskom. Together with the public provision of energy, Eskom as a vertically integrated public electricity-producing company must be protected from the private sector,” he said.
Mineral Resources and Energy Minister Gwede Mantashe said the adoption of the bill is yet another significant milestone in the performance of the sixth administration.
“We are, therefore, convinced that the adoption of this bill will not only give effect to Eskom unbundling reforms, but it will also encourage private sector participation in the electricity industry and thus introduce competition in the industry,” Mantashe said.
The bill will also address theft of electricity and vandalism of infrastructure by introducing penalties. It will provide penalties of up to R5 million and 10 years’ imprisonment for people or entities that steal electricity or damage the infrastructure.
The bill was supported by all voting parties except the EFF which also believe this is a route towards privatisation.
Sunday Independent
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