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SA needs R35bn power boost - lobbyist

Oct 09 2012 15:38 Sapa
Electricity

Eskom's strategy of buying back power from large energy users is keeping the lights on, but at the cost of economic growth.

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Johannesburg - South Africa needs to spend R35bn to maintain neglected distribution networks, or risk further backlogs, the Free Market Foundation warned on Tuesday.

"We're in a serious situation," the lobby group's spokesperson Eustace Davie told reporters in Johannesburg.

Electricity was used by local governments to cross-subsidise other goods, he explained.

In addition, a decade-long attempt to restructure distribution meant municipalities had no incentive to invest in electricity infrastructure when they might not benefit.

As a result, spending on the grid itself had been neglected. Davie recommended municipalities should either contract out the maintenance, or sell off the grid.

Doug Kuni, MD of the Independent Power Producers' Association, said economic growth depended on growing the electricity supply. Currently, some 5000MW was lacking in the economy.

"You cannot grow your economy without new electricity," he emphasised.

Eskom's strategy of buying back power from large energy users was keeping the lights on, but at the cost of economic growth.

Blackouts in 2007 and 2008 had cost the economy between R50bn and R119bn, he said.

But independent power producers could not distribute power directly to consumers without Eskom, which owned the grid.

The solution was to establish an independent grid, either under government control or at least partially privatised.

Consumers would benefit, as producers could compete to deliver energy at the lowest price, Davie said.

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eskom  |  electricity  |  economy
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