Johannesburg - Energy portfolio committee chairman Sisa Njikelana says he hopes to find out why the Independent System and Market Operator (Ismo) Bill has not been put to Parliament but acknowledges that state power monopoly Eskom has been “a reluctant” participant in its proposed implementation.
The bill, which was considered by the committee last year and was to have been put to the National Assembly in June, was suddenly withdrawn by ANC chief whip Stone Sizani.
DA energy spokesman Lance Greyling said it was “thoroughly perplexing”. The independent operator would buy energy from Eskom, co-generators and independent power producers (IPPs) and would assist in establishing a fairer playing field.
After the bill was withdrawn, it has failed to be returned for further consideration – as the programming committee had pledged. Questions Greyling had put to Njikelana, Sizani’s office and the programming committee about where the bill was in the legislative pipeline, and why it had been blocked, had resulted in the three pointing fingers at each other.
But Njikelana said yesterday that in the coming weeks he would be “coming to Parliament” to talk to the parties concerned to fast-track the bill, but denied pressure had come from any minister – including Public Enterprises Minister Malusi Gigaba – to delay the measure. He insisted Eskom had not put pressure on him to delay its passage. Gigaba’s office denied it had put pressure on the ruling party regarding the legislation.
Anton Eberhard, a member of the National Planning Commission, said: “Eskom, despite its public face, would prefer the status quo and Gigaba has weighed in behind the scenes.”
Eskom’s acting spokesman, Andrew Etzinger, said the power utility was “participating in the parliamentary process concerning the Ismo Bill and is not blocking or delaying its implementation”. He said Eskom supported a phased implementation of the legislation to manage security of supply “and other risks”.
Njikelana said Eskom “did express its problems [with the bill] candidly” when his committee was considering the legislation, which he said had been executed exhaustively.
Eskom had been concerned about the impact of losing control over the electricity procurement process, the impact of existing contracts and the impact on its ratings by the agencies. The central aim of the bill is to remove the operation of the electricity grid from Eskom and place it in an independent but still state-owned entity.
Greyling said the measure “is a vital step in restructuring our monopolised electricity sector and was called for as far back as 1998 in the Energy White Paper. The bill will also bring urgently needed institutional reform of our electricity sector.”
Eskom had resisted “such a move for over a decade now”. It was therefore “highly suspicious that at the final stages of this bill being adopted it suddenly was removed, and without any reasons given to the committee”, Greyling said.
It would hold back the potential dynamism of the IPP sector to contribute to solving the country’s energy challenges, he said.
Eberhard said as the electricity market opened up with the entry of IPPs “we need a level playing field for planning, procurement and contracting otherwise Eskom will always game the system, and privilege their own plans and investments before potentially more competitive options”.
He said the bill would represent “a positive step forward but is complicated”. The operator would have a weak balance sheet “and so will need serious guarantees and back-to-back contracts to make it work”.
“A more elegant solution in my view would be to spin off Eskom’s generation stations so that what remains in Eskom is planning, procurement and contracting of new power, system operation, transmission and distribution of electricity, and so [create] a neutral and conflict free institution to deal with IPPs.”
Johan van den Berg, the SA Wind Energy Association chief executive, said an independent operator carrying out the procurement process for transmission would not necessarily have a great impact on his sector. This was not because it was a small player, but because there was a 20-year power purchase agreement in place. - Business Report