Public enterprises minister Pravin Gordhan has announced the dismantling of Eskom’s monopoly, which will see its distribution and transmission divisions being separated by March 31 2020.
Gordhan on Tuesday presented journalists with a much-awaited special paper outlining the government’s plan for the power utility for the next decade.
He announced that Eskom’s transmission component, responsible for carrying power to different parts of the country, would be separated and would function as a subsidiary of Eskom Holdings.
Gordhan explained that transmission and generation will happen in a context where they will be subsidiaries of the company.
There are about 6,000 people working in transmission who are responsible for carrying about 45,000km of lines to ensure electricity is distributed throughout the country.
Transmission is responsible for looking after this infrastructure [the cables] and is also a systems operator, meaning these are the people that monitor how much power is demanded at any point in time and how much power is available from the different generation sources.
It will now have a buying component which from day to day will decide how much energy it will buy from Eskom generation, from renewable sources, and from the private sector.
This is one of the concrete plans Gordhan announced. He also proposed a controversial cluster system in which South Africa’s 16 coal-fired power stations would be organised into three clusters to compete among themselves so that consumers benefit from the best price.
Gordhan said as a result of the lack of competition, South Africans did not get the most effective pricing coming out of the generation side. So the government is considering the creation of three clusters of power plants – with each cluster acting as a business and that business would be required to produce power as cost-effectively as possible, not only for consumers to get the cheapest electricity but to promote internal competition from generation facilities in different power stations.
This formula has been good for business and the consumer and has led to better efficiencies in the generating process in other parts of the world.
The plan was informed by the recently approved Integrated Resource Plan. “This is the beginning of a process, this is not the entirety of the process,” he said.
He warned that the process would not be as easy as changing a tyre or bolting on a boiler.
Gordhan would not say how the government was going to deal with Eskom’s debt burden of R450bn, saying finance minister Tito Mboweni would speak about this at his midterm budget policy statement on Wednesday.
Gordhan lamented the culture of non-payment, saying it was “unacceptable” in a democracy and that people should pay or face the consequences of not paying. “We taught you to pay taxes.”
He noted that state capture had resulted in systemic damage at Eskom. “This is not about someone who stole a few millions and ran off to an island – it’s systemic,” he said but added that state capture could not be blamed for everything.