Ramokgopa’s energy plan
MOVE TO FINANCE TRANSMISSION LINES WITH PRIVATE INVESTORS
Proposal includes not giving up government ownership of Eskom.
Minister of Electricity Kgosientsho Ramokgopa hopes to announce “within the next week or so” a plan to finance new transmission lines, which will allow private investment, while Eskom retains ownership of the grid.
This may unlock further new generation projects to alleviate the electricity crisis which has resulted in record levels of load shedding in 2023 with equally ominous forecasts for 2024.
On Tuesday, Ramokgopa explained the additional powers granted to him in terms of a recently signed Memorandum of Understanding with Public Enterprises Minister Pravin Gordhan, “to better clarify their respective responsibilities in respect to Eskom and the resolution of the electricity crisis”.
According to the Presidency on 5 January, Ramokgopa now has, among others, the following powers:
To ensure that matters dealing with transmission are dealt with, including the issuing of the Requests for Proposals and/ or Requests for Information for financing of new transmission lines.
Developing and agreeing on financing models and options for transmission with National Treasury and the Presidency.
The transmission finance plan was submitted to Cabinet late last year but was referred back to him
to have “one or two things adjusted”. This has been done and he promised to unveil the plan within the next two weeks.
Eskom is responsible for the transmission development plan which provides for 14 000km of new lines in the next decade and new corridors were identified in conjunction with the Eskom team, Ramokgopa said.
He believes this plan must be expedited to complete the work in five to seven years. The 1 400km Eskom plans to construct in the next three years, must be increased to 6 000km, he said.
Private sector support
Because of Eskom’s weak balance sheet, it is, however, necessary to “tap into private sector liquidity”, without relinquishing ownership of the grid.
He said National Treasury has agreed to the finance options that he will announce and emphasised that it cannot expose the sovereign and won’t rely on sovereign guarantees.
Ramokgopa indicated that there will be a “dedicated body” to enter into the finance contracts so the ability to contract on transmission is not caught up in bureaucracy.
He added that there is too much bureaucracy, which prevents government
from being agile in the rapidly changing electricity supply market.
On Tuesday, Eskom announced the long-awaited appointment of the board of the new National Transmission Company of South Africa (NTCSA), which is a crucial building block in the establishment of the NTCSA as a subsidiary of Eskom on the road to unbundling its generation, transmission and distribution functions.
The utility said the unbundling is the key aspect of the department of public enterprises’ “roadmap for Eskom in a reformed electricity supply industry”. “Transmission is first of Eskom’s three divisions to achieve legal separation. The appointment of the board completes another critical milestone,” Eskom said.