CLOSE X
Advertisement

‘SA needs an independent grid’

Economy

South Africa needs an independent operator in the electricity sector, the Free Market Foundation (FMF) said on Tuesday.

A single grid owner and operator, South Africa's current model, resulted in a lack of competition, FMF director Eustace Davie told reporters in Johannesburg.

Share this story
050910 Electricity pylons carry power from Cape Town's Koeberg nuclear power plant July 17, 2009. South Africa will need 20 gigawatts (GW) of new power generation capacity by 2020 and would require double that amount a decade later to meet rising demand, the country's power utility said September 7, 2009. Picture taken July 17, 2009. REUTERS/Mike Hutchings (SOUTH AFRICA ENERGY BUSINESS)

This created the potential for excessive charges and difficulties in gaining access to the grid. A better scenario would see an independent system operator created to buy power from competing countries, said Davie.

Allowing Eskom to go ahead with its 16 percent tariff increase application would be disastrous for the economy, he said.

“There is a price tsunami that's about to hit the country, and it's going to carry on for four or five years.”

Firms would close down because they could not afford electricity, he warned.

The FMF is a lobby group advocating for less government intervention in the economy.

Davie questioned figures contained in Eskom's latest multi-year price determination for the next five years (MYPD3).

The submission provided for a return to government of R186.8 billion over the period, which the government should forego. Eskom's depreciation costs had also been calculated at the current replacement value of assets, rather than their historic value. This had added a further R279.5 billion to Eskom's revenue requirements.

He questioned the need for R13 billion to be spent on integrated demand management, a programme which, he said, included the cost of buying back power from large energy users.

“Independent experts, technical and financial, must interrogate the figures contained in the MYPD3,” Davie said.

“The matter is too important to be decided upon without thorough investigation.” - Sapa

Share this story
Advertisement
X