Gordhan pins his hopes on the amendment of the Electricity Regulation Act

Public Enterprises Minister Pravin Gordhanhas pinned his hopes on the amendment of the Electricity Regulation Act (ERA) as a long-term solution to reform the State-owned Eskom and deal with the country’s energy crisis.

The ERA Amendment Bill, which is aimed at the establishment of a competitive electricity market in South Africa, is currently before Parliament for consideration.

Presenting his department’s Budget Vote in Parliamentyesterday, Gordhan said the reform of state-owned enterprises (SOE) was an absolute imperative to move the country to a higher level of development.

As part of operational developments, Gordhan said the operationalisation of the National Transmission Company of SA (NTCSA) would be completed by November while the appointment of the NTCSA board was expected by the end of June.

Gordhan said the distribution subsidiary is set to be corporatised by the end of December 2023 as Eskom was finalising the appointment of the Group CEO.

The minister said Eskom must be fixed as South Africa’s national security depended on this.

“Eskom needs decisive leadership to function in a wholly successful manner for it to deliver on its mandate. Looking into the future, Eskom seeks to address integration of technology to improve business processes and other functions,” Gordhan said.

“The Energy Regulation Act (ERA) Bill has been submitted to Parliament for consideration and approval. The approval of the ERA will be critical to the restructuring of Eskom and the creation of a competitive market.”

Gordhan said Eskom was projected to spend R290 billion over the next five years; with R152bn for optimising generation and R74bn to strengthen transmission.

He emphasised that generation recovery must be complemented by introduction of new capacity to end load shedding, with the expansion and strengthening of the grid as per the Transmission Development Plan to allow new generation capacity (IPPs, gas, batteries, other renewables).

Gordhan said the National Energy Regulator of SA was also set to issue a trading, importing and exporting licence by July, while the due diligence for the establishment of a Generation Company and New Holdings will be completed by 31 March 2024.

“Eskom will no longer be Eskom as we know it by the time we get to the end of this financial year,” Gordhan said.

Gordhan said challenges such as the Covid-19 pandemic and the war in Europe had shown the importance of seizing this opportunity to fix, repurpose, realign SOEs to deliver on the government’s developmental agenda.

He said SOEs' finances, operations, governance, culture, and skills base have been compromised, and required reform to deliver economic and social development.

Gordhan said the SOE reform process was not unique in the world as many countries were undertaking similar processes.

“South Africa is a middle-income country. It finds itself in a middle-income trap where it cannot transit to higher levels of economic development unless we do things differently,” he said.

“The SOEs must play a crucial role in helping South Africa to move to a higher level of development. We need SOEs to drive skills development and introduce the adoption of new technologies to optimise and streamline business processes as part of the 4th Industrial Revolution.”

BUSINESS REPORT