- Covid-19 is likely to have an impact on Eskom's reform plans, according to the International Institute for Sustainable Development.
- The Institute has analysed reforms in electricity sectors elsewhere, and recommends Eskom should adapt its reforms to prioritise social and environmental impact.
- Some analysts believe renewable energy can drive greater jobs growth, which will be sorely needed after the pandemic.
- But Cosatu argues that corruption has already caused job losses in the past, and regardless of how electricity is provided, the energy sector must be transformed.
While Eskom is in the process of unbundling, the Covid-19 pandemic will have an impact on its reform plan as it has to take into account falling demand, economic shocks and the impact on workers, according to the International Institute for Sustainable Development.
The institute on Wednesday held a panel discussion and released a paper titled, Rethinking Eskom: Lessons from electricity sector reform in India & Mexico. It analyses the reform in the electricity sectors of Mexico and India to inform its recommendations for Eskom's process. It has said the aftermath of Covid-19 would require Eskom to adapt its reform, by "prioritising social and environmental impacts, creating good jobs without damaging public health or the environment".
The state-owned power utility has a debt burden of R450 billion, which it plans to reduce to R200 billion. The unbundling into three entities- generation, transmission and distribution, will be instrumental in addressing its debt.
The lockdown instituted to slow the spread of Covid-19 impacted Eskom's revenues negatively. But the power utility used the lockdown to implement short-term maintenance and has since reduced the probability of load shedding to three days in Winter, Fin24 previously reported.
Commenting on Eskom's unbundling UCT Professor and panellist Anton Eberhard, who also chaired the Eskom Sustainability Task Team, said that it would pave the way for an independent transmission system and market operator (Itsmo) to fairly and transparently contract least-cost power, mostly from renewables. This could draw investment and ensure security of energy supply, he added.
"Solar and wind sets us on a sustainable path. It's good for jobs as well," Eberhard said. "There's a real potential for serious jobs growth within the renewable sector. Both at a utility scale but also in distributed energy generation," he said. Secure energy supply would bode well for stimulating the economy post Covid-19. It would attract investment and by extension support jobs, he explained.
'Neither here nor there'
Parliamentary coordinator for Cosatu, Matthew Parks, said that the unbundling issue was "neither here nor there", as the reality is Eskom was poorly managed in the past decade through corruption and fell behind in structural shifts in the energy sector. As a result, jobs are at risk. He argued that reforms in the sector such as moving from fossil fuels to renewable energy, should make sure not to leave behind workers and communities. "We can't emphasise jobs enough," Parks said.
Parks said that renewable energy technologies – such as wind turbines and solar panels could be manufactured locally. "This would transform the energy sector from a burden to the economy to one that creates jobs for South Africans, and which exports power to the continent. There needs to be political will to do it," Parks said.
"Eskom does not have any money to invest in generation capacity, but there is huge international green funding available for that. Again, it requires a serious just transition to take place for Eskom workers and communities," he emphasised.
He said workers are "scared to death" about losing jobs. But the opportunities of green energy funding should be used to reindustrialise the economy. "'For us there are huge opportunities, but if we sleep on the job, there are huge threats as well," said Parks.
Cosatu has drawn up a social compact for Eskom which has been finalised by the National Economic Development and Labour Council and is set to be adopted by the Presidential Working Committee in July, Parks said.
Speaking specifically on its debt, Eberhard said that the utility would require a range of interventions to deal with it, including commitments from government. At a briefing last week Eskom CEO Andre de Ruyter said no additional bailouts would be required from government this year.
"The issues of refinancing Eskom is definitely going to come up again," Eberhard said. There is an option for a just energy transaction – a blended climate finance facility which would allow for Eskom's debt to be financed at lower rates and would create an income stream to finance the just energy transition, he said.
Parks said that government, and the private sector should all come to the party. At the same time, Eskom should plug its hole by implement the restructuring reforms and be held accountable.