Eskom 'not to blame' for bungling

2012-06-11 11:31
An electricity pylon is pictured. (Herman Verwey, Beeld)

An electricity pylon is pictured. (Herman Verwey, Beeld)

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Cape Town - Eskom is not to blame for the state of electricity supply in South Africa, the Free Market Foundation has said.

The power utility has come in for criticism of its handling of electricity supply in SA, particularly during the rolling blackouts of 2008, and has asked the National Energy Regulator of SA (Nersa) for escalating tariff increases to reflect the cost of power generation in SA.

"I always say 'Eskom is not to blame' so I'm not one of those people. On the contrary, I think Eskom is a victim," Leon Louw, executive director of the Free Market Foundation told News24.

"Eskom doesn't actually itself recognise to extent it is a victim, strangely enough," he added.

The organisation submitted its arguments to the parliamentary portfolio committee on the Independent System and Market Operator bill, saying that the failure of Eskom was a policy failure.

State entity

The bill is meant to provide for resource planning of generation, and aspects of managing the electricity grid, but adds that the state should own 100% of the proposed independent system and market operator.

"What we said in our evidence to the portfolio committee last week in parliament is that they are to blame, not Eskom: This is a policy failure.

"It's a policy failure in that firstly, we have historically inherited from the past, the model which is quite common around the world, namely a government electricity utility that generates and distributes power through one single entity," Louw said.

He said that developed countries had moved away from the model of a single state entity that controlled electricity generation, but added municipalities could also produce their own electricity.

"Over the last 30 years or so, virtually all countries have abandoned that model and now have independent generating and an independent grid, and generating itself has been unbundled into different types.

"We actually happen to think that whether it's private or government isn't the big deal - it's unbundling that's the big deal."


Louw said that the electricity crisis of rolling blackouts was not a surprise because experts had predicted that a lack of proper maintenance would eventually collapse the system.

"The crisis is no surprise, it's not rocket science. Everyone knew it was coming; it was predicted and the government itself said, stripped of all the packaging, it really amounted to saying: That there were going to be IPPs [Independent Power Producers] entering the market; it would take up something like 30% of supply."

Eskom CEO Brian Dames conceded that maintenance programmes had been lacking, but that the utility would make up the backlog by the end of 2013.

"We are doing maintenance - unprecedented levels of maintenance this year of year as we go into winter. We've not done this before to address the backlog we've been talking about and to improve the safety and reliability of our plants.

"Our objective would be that by the end of next year [2013] we would have eliminated most of our backlog," said Dames.

The policy on IPPs have not resulted in these entities setting up in the way envisaged because of failures in the policy as well as apparent inaction by politicians, Louw insisted.

"You and I are in no position to judge whether Eskom was well managed: What we are in a position to judge is that policy was badly managed: The policy to bring in independent power producers, to have an independent grid - that policy was blocked, firstly by [former minister of public enterprises] Alec Erwin purely for apparently ideological reasons."

The issue of licenses for Independent Power Producers has hamstrung their ability to invest in electricity generation capacity and Nersa only approved licensing of 28 preferred bidders for the first phase of government’s renewable energy independent power producer programme on 6 June.

"My view is that it's firstly parliament, secondly Nersa and thirdly, the department of public enterprises - that's where the blame lies," Louw said.

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Read more on:    free market foundation  |  eskom  |  energy  |  environment

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