Little enthusiasm for proposed electricity funding model
THE Department of Energy yesterday proposed a new model of finding additional funding for electricity infrastructure maintenance, but it was met with little enthusiasm from Eskom and the National Energy Regulator of SA (Nersa).
As explained to the portfolio committee on energy by the department’s acting chief director for electricity policy, Thabang Audat, the funding plan would see municipalities use the money ring-fenced in their tariff structures for maintenance, to service fresh debt founded on government guarantees.
He said it was crucial to find a sustainable funding model to address the maintenance backlog because it had reached the stage where there was a risk that additional capacity being generated could not reach consumers.
“There will be no additional funding from the fiscus because 5-8% of the tariff increases approved by Nersa is already earmarked for maintenance,” Audat said.
The department had concluded, he said, that the most practical funding option would be a central loan facility, such as one of the development finance institutions, including the Development Bank of Southern Africa, the Public Investment Corporation or an international lender body.
It was proceeding with discussions to this end, he added.
Eskom’s group director for distribution, Ayanda Noah, said the power utility, which has a guarantee facility of R350 billion, believed that it was more desirable for electricity provision to become a self-sustaining exercise, than to source more outside funding.
Audat noted that municipalities were already relying on the private sector to assist them with maintenance as they lacked the capacity, and said forcing them to use funding as intended could trigger a collapse of social infrastructure.
Asked about Eskom’s view, he suggested it might be coloured by the strife between the utility and municipalities over distribution and local government’s collective outstanding debt of R9.6bn to Eskom.
Nersa’s Mbulelo Mcetezo, member responsible for electricity, said the regulator needed time to mull over the department’s proposal.