Business urges Eskom to withdraw legal challenges to bolster energy security

Banele Ginidza

Business Leadership South Africa (BLSA) and Business Unity South Africa (BUSA) have strongly condemned Eskom's recent legal challenge against the National Energy Regulator of South Africa (Nersa), which granted five new distribution licences for electricity trading.

The two organisations on Thursday argued that Eskom's actions were detrimental to the country’s energy security initiatives and called for urgent governmental intervention.

In a statement, BLSA and Busa called on Eskom to withdraw all legal challenges against the five electricity trading licences as this was creating uncertainty and sending a negative signal to investors.

They said this was also delaying critical energy projects and may ultimately prolong the devastating economic and social impact of load shedding.

The government’s stated policy position is the unbundling of Eskom, encouraging private sector investment in generation and transmission, and creating a competitive market to help solve the energy crisis.

BLSA CEO Busi Mavuso said Eskom’s actions contradicted this policy direction and seek to stall or undermine the reform process.

Mavuso said by legally challenging Nersa’s awarding of trading licenses, Eskom was actively working to protect its historical monopoly at the direct expense of a stable national power supply.

“Eskom cannot be both the primary cause of our energy crisis and the gatekeeper of its solution. South African businesses are failing, jobs are being lost, and our economy is stagnating. We need more power on the grid now,” she said.

“For Eskom to spend public money on litigation designed to frustrate the very reforms the government is championing and block the investment that can help secure cheaper and more secure energy is illogical and completely untenable.” 

This is as Eskom last month launched a legal review of Nersa's granting licences for electricity traders, Green Electron Market, CBI Electric Apollo, GreenCo Power Services and Discovery Green and NOA Group Trading.

Eskom has argued that the five trading license represent a fundamental and unilateral change in policy by Nersa, and could distort the provision of electricity and also allow traders to ursurp its customers to the detriment of its tariff pricing structure and those customers on subsidisation to gain access to electricity.

However, the BLSA and Busa said to date, the Electricity Regulation Act has led to investment in new renewable generation projects of more than R30 billion, expected to generate nearly 10 000 new job opportunities in generation and storage alone. 

"Introducing a competitive wholesale market is essential to unlock an additional 6GW of new private solar PV and 3.5GW of wind by 2030. This represents a further R132bn in private investment and substantial job creation," they said.

The organisations argued that the power utility’s focus should be on expanding and modernising the national grid to accommodate a diverse range of energy sources, not on stifling innovation and competition through the courts.

They said the future of South Africa’s energy landscape was one of decentralised, mixed-generation capacity, where agile municipalities and efficient Independent Power Producers contribute to a resilient and robust national grid.

“We are calling on Eskom’s board and executive management to align Eskom’s mandate and actions with the reform direction as outlined in the President’s Energy Action Plan and the Electricity Regulation Act,” said Khulekani Mathe, CEO of Busa.

“Introducing a vibrant and competitive market that encourages much-needed additional investment is critical for consumers to access affordable, clean power, which is key to longer term energy security and making South Africa globally competitive. Anti-competitive and discriminatory practices undermine the national agenda.”

The BLSA and Busa urged the Minister of Electricity and Energy to engage Eskom’s board and relevant government entities to secure an immediate cessation of all lawsuits and legal disputes initiated by Eskom against Nersa.

They also want a public commitment from Eskom to work collaboratively with all stakeholders to fast-track the integration of new generation capacity onto the national grid, in parallel with expanding the grid.

They also want clear directives from the appropriate government authorities instructing Eskom to cease what they called "anti-competitive and discriminatory behaviour" and fully support the liberalisation of the energy sector.

"The era of a single, State-run monopoly controlling our country’s economic destiny is over. To power our future, we must empower progress and encourage investment and job creation, not protect the past," they said.

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