Donwald Pressly
THE PRIVATE sector should play a much more meaningful role throughout the electricity supply chain, MPs were told yesterday.
This included allowing for a supply “wheel” directly from independent power producers to industries via the national grid, the Free Market Foundation’s Temba Nolutshungu said.
Nolutshungu argued that the potentially erratic supply of electricity and also the possibility of blackouts caused by the gradual degeneration of the electricity distribution network – because of poor management by the municipalities – was having a knock on negative impact on South Africa’s economy.
He pointed out the irony of urging business to reduce their use of electricity, which was having a ripple negative effect on gross domestic product and a loss of direct investment.
MPs have been discussing the problems that face the distribution industry, which is carried out either directly by state-owned power utility Eskom or by 177 of the 283 municipalities licensed by the national energy regulator (Nersa) to carry out the service. Many of these municipalities were not investing in the service and backlogs stand at about R37 billion.
“Unless something is done drastically, we are heading for a big crisis… We think it calls for emergency measures,” said Dinga Sikwebu, the national education co-ordinator of the National Union of Metalworkers of SA. He was representing the National Union of Mineworkers and Cosatu at a joint energy and co-operative governance portfolio committee discussion on electricity distribution.
He was struck by the consensus of opinion among a broad group of stakeholders about the shortages, backlogs in investment and fragmentation of the electricity supply industry.
Yesterday, Sikwebu said that rightly or wrongly, service delivery protesters were demanding that Eskom supplied them directly. This was as it could provide the service cheaper than municipalities, many of which put surcharges on electricity bills to homes and businesses to cross-subsidise other municipal services or pay for public electrical consumption like street and traffic lighting.
The electricity distribution network included transformer stations and local loop electricity cables.
Sikwebu complained that the Department of Energy had provided little direction on restructuring since the Red – regional electricity distributor – experiment was scrapped 18 months ago.
The planned six Reds were to have distributed power on behalf of the government, Eskom and municipalities at uniform tariffs.
Another problem, said Sikwebu, was that companies involved in supplying the electricity distribution component of the power supply were not getting orders. And because many municipalities were not spending money on maintenance and upgrading “there is no business for these companies”.
“The manufacturing capability of this sector has gone down… For us (in the unions) it means job losses,” Sikwebu warned. If the required backlog of up to R35 billion was “put forward” tomorrow “we don’t think the sector will be capable of building such (required) components”, which would lead to large-scale imports of these products.
He suggested a grant system be introduced to contribute to “a national refurbishment fund” for electricity distribution. “We can talk about how this can be structured,” said Sikwebu, but he noted that it should be aligned to the municipal infrastructure grants, which were dispensed from the national fiscus.
Some industry players were not paying their levies and the entity had been placed under administration. Business, labour and the government needed to work together to resolve this problem. Accenture official Ken Robinson suggested municipalities that did not invest appropriately in power distribution networks be stripped of Nersa licences.