https://www.polity.org.za
Deepening Democracy through Access to Information
Home / Opinion / Latest Opinions RSS ← Back
Africa|Energy|Eskom|Financial|Generators|Maintenance
Africa|Energy|Eskom|Financial|Generators|Maintenance
africa|energy|eskom|financial|generators|maintenance
Close

Email this article

separate emails by commas, maximum limit of 4 addresses

Sponsored by

Close

Article Enquiry

Distribution deadlock

Close

Embed Video

Distribution deadlock

Photo of Terence Creamer

27th September 2024

By: Terence Creamer
Creamer Media Editor

ARTICLE ENQUIRY      SAVE THIS ARTICLE      EMAIL THIS ARTICLE

Font size: -+

Few would disagree that the current financial and operational model for electricity distribution is no longer fit for purpose.

This lack of sustainability is reflected in the continual rise in the arrear debt owed to Eskom, which currently stands at about R80-billion. It can also be seen in the high number of illegal connections, the implementation of daily load reduction by Eskom and municipal distributors, insufficient network maintenance and investment, deteriorating municipal finances and several regulatory and legal disputes.

Advertisement

In its most egregious (yet least visible) form, this lack of sustainability is also evident when funds transferred to cover the monthly 50 kWh free basic electricity allowance for indigent households do not reach the intended beneficiaries and are pocketed by local governments.

From time to time, some progress seems to be made, as was the case recently when Eskom and the Maluti-A-Phofung Municipality unveiled a package aimed at settling the municipality’s R8-billion arrear debt by enabling Eskom to collect revenue directly from customers in the area.

Advertisement

Such announcements are undercut, however, by the poor performance of the larger debt-forgiveness plan introduced by the National Treasury only last year. A failure epitomised by a recent announcement that the Sheriff of the Court had attached the bank accounts of Emfuleni so as to pay Eskom, only months after the municipality signed up to the relief scheme.

At a regulatory level, the unsteady state of the municipal distribution model is visible in the current attempt by the National Energy Regulator of South Africa to appeal a judgment declaring the municipal price hikes of July 1 unlawful. Not to mention moves by Eskom’s distribution arm to prevent the entry of electricity traders into areas where it currently enjoys sole jurisdiction.

At a legislative level, meanwhile, the South African Local Government Association is seeking to convince President Cyril Ramaphosa not to implement those parts of the Electricity Regulation Amendment Bill that it believes could negatively affect municipal revenues. Given the far-reaching nature of the Act, which is seen as urgent for aligning the electricity industry with the global energy transition, it’s unclear whether this is possible, let alone desirable, without wholesale redrafting.

To be sure, all these issues are symptoms rather than causes and relate largely to the way electricity revenues have been treated by municipalities in the past. To protect this ‘cash cow’, municipalities have adopted defensive rather than proactive stances with regard to the restructuring of the industry.

As a result, there are too many and too many weak links in the chain, which are becoming weaker daily because of an inappropriate tariff structure that does not fully reflect fixed and variable costs; an imbalance that is leaving municipalities particularly vulnerable, given technological developments that enable households and firms to install their own generators.

Moving from diagnosis to remedy is no easy task, however, and should arguably now be the number one priority of the National Energy Crisis Committee, given the space created by the easing of loadshedding.

EMAIL THIS ARTICLE      SAVE THIS ARTICLE ARTICLE ENQUIRY

To subscribe email subscriptions@creamermedia.co.za or click here
To advertise email advertising@creamermedia.co.za or click here

Comment Guidelines

About

Polity.org.za is a product of Creamer Media.
www.creamermedia.co.za

Other Creamer Media Products include:
Engineering News
Mining Weekly
Research Channel Africa

Read more

Subscriptions

We offer a variety of subscriptions to our Magazine, Website, PDF Reports and our photo library.

Subscriptions are available via the Creamer Media Store.

View store

Advertise

Advertising on Polity.org.za is an effective way to build and consolidate a company's profile among clients and prospective clients. Email advertising@creamermedia.co.za

View options

Email Registration Success

Thank you, you have successfully subscribed to one or more of Creamer Media’s email newsletters. You should start receiving the email newsletters in due course.

Our email newsletters may land in your junk or spam folder. To prevent this, kindly add newsletters@creamermedia.co.za to your address book or safe sender list. If you experience any issues with the receipt of our email newsletters, please email subscriptions@creamermedia.co.za