President Ramaphosa says Eskom will remain state-owned as government restructures the electricity sector, introducing greater competition while establishing an independent, state-owned Transmission System Operator to manage the grid.
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President Cyril Ramaphosa says South Africa must now focus on bringing down the cost of electricity after making significant progress in ending load shedding.
In his weekly letter to the nation, Ramaphosa said the country could not become complacent about the improvement in Eskom’s performance and needed to complete reforms aimed at creating a reliable, affordable and cleaner electricity system.
“Our task, therefore, is not simply to produce enough electricity. We need electricity that is reliable, affordable and increasingly clean,” Ramaphosa said.
Ramaphosa said the cost of electricity had increased significantly over the past two decades, placing additional pressure on households and making it more expensive for businesses to operate and invest.
He said government was therefore fundamentally transforming the structure of the electricity sector.
A new Electricity Pricing Policy has been published to promote transparent tariffs, prevent inefficiencies from being passed on to consumers, expand access for poorer households and enable competition in electricity generation.
The National Energy Regulator of South Africa (NERSA) is also finalising regulations for a competitive wholesale electricity market.
“This competition can drive greater efficiency, encourage investment and put downward pressure on the cost of electricity,” Ramaphosa said.
South Africa’s solar and wind resources also presented an opportunity to produce cheaper, cleaner electricity and support industrial growth and job creation.
A key part of the reform is the establishment of an independent, state-owned Transmission System Operator (TSO).
Ramaphosa said the TSO would manage the national electricity grid and electricity market independently and ensure Eskom and other electricity producers competed on a level playing field.
“The Transmission System Operator (TSO) will manage the national electricity grid and electricity market independently and impartially. The TSO will ensure that Eskom and other electricity producers compete on a level playing field. It will act as a referee amongst all producers,” he said.
The TSO would also help mobilise investment to expand the transmission network and connect new generation projects to the grid.
Ramaphosa said the Eskom Restructuring Task Team, appointed at the beginning of the year, was focused on implementing the reforms.
Ramaphosa stressed that the reforms were not aimed at privatising Eskom.
“Eskom will remain state-owned and must get into the renewable energy market to compete effectively with new power generators.”
The national transmission grid was a strategic national asset that would also remain state-owned and held in the public interest.
“We do not need to choose between a strong Eskom and other competitors. We can have both,” Ramaphosa said.
He said the reforms were intended to move South Africa away from a system where one company carried almost the entire responsibility for generating electricity, to one where multiple producers could invest and compete.
Ramaphosa said workers would not lose their jobs as a direct result of the establishment of the TSO.
“Workers will not carry the cost of reform.”
He said government was committed to consulting organised labour throughout the restructuring process.
Ramaphosa had recently engaged with the Eskom board and the National Union of Mineworkers, emphasising that Eskom and the TSO would remain state-owned and that workers’ interests would be protected.
The reforms would be implemented carefully and responsibly, with further engagements planned with stakeholders in the Eskom ecosystem.
Ramaphosa said the purpose of the reforms was to create an electricity system that benefited households and businesses while supporting economic growth.
“The purpose of the electricity reform is therefore not to privatise Eskom. It is to build a better electricity system,” he said.
“The ultimate beneficiary must be the South African consumer.”
Households should benefit from more affordable electricity, while businesses should have access to reliable and competitively priced power to invest, expand and create jobs.
Ramaphosa said South Africa had already shown what determined reform could achieve through the improvement in Eskom’s performance.
“A few years ago, many believed that load shedding would be with us indefinitely.
''Through decisive action, investment and the hard work of thousands of people across the electricity sector, we have changed that trajectory. We must now complete the work we started,” he said.
“Our objective is straightforward. We want an electricity system that provides abundant, affordable and reliable power to every South African,” Ramaphosa said.
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