SONA2019: Eskom rejig does not go far enough

Issued by Natasha Mazzone MP – DA Shadow Minister of Public Enterprises
08 Feb 2019 in News

The Democratic Alliance (DA) welcomes President Cyril Ramaphosa’s announcement during the State of the Nation Address (SONA) to split Eskom up, but he has not gone nearly far enough.

Eskom will be unbundled into a holding company, with three separate business entities namely: generation, transmission and distribution and will be wholly owned by the holding company.

This restructuring will entail that each entity has the same holding board. Thus, the intention to stimulate competition in the generation sector of Eskom will be limited by the fact that the entities are not wholly independent entities. Preference and influence will still be possible within the holding board structure.

It also does not go far enough by preparing the generation unit for privatisation to place it on an equal competitive footing with other independent power producers nor does it allow well-functioning metros to be able to source energy directly by independent energy suppliers. Overall, the plan will not ensure a stable supply of electricity at reduced cost for consumers into the long-term.

This means that Eskom’s request for tariff increases remains a reality and the ANC will continue to place the burden of their failures on South Africans.

The DA’s “cheaper electricity bill” or Independent Systems Market Operator (ISMO) bill would allow all of the above to be implemented. We have been proposing this bill since last year.

Ramaphosa also announced yesterday that the government will take steps to reduce municipal non-payment yet no details are revealed. It is once again more talk from the ANC with little action or delivery.

On Eskom’s finances, the President stated that the government will support Eskom’s balance sheet. Whether this will entail a government bailout or a debt swap, remains to be seen and poses a massive risk to the country’s sovereign credit rating.

The ANC’s plan to address Eskom falls short of the mark to tackle rising electricity costs, increasing municipal non-payments, the financial crunch and instability in the energy supply. It leaves us with more questions.

The DA will continue for fight for a cleaner and cheaper electricity sector for all South Africans.