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Cape Town - Restructuring of the electricity distribution industry (EDI) is to be stopped immediately, Minister in the Presidency Collins Chabane announced on Thursday.
"Cabinet decided to terminate the EDI restructuring and discontinue the process of creating the regional electricity distribution (Reds bodies) with immediate effect," he told a media briefing following the cabinet's last regular meeting of the year.
Although the electricity distribution industry holdings (EDIH) had made significant progress in establishing the Reds, cabinet approved a recommendation that the energy department take over the programmes previously carried out under the EDIH mandate, he said.
The department would review the whole electricity value chain to develop a holistic approach to revitalise electricity infrastructure and energy security, as well as the financial implications.
An administrator would be appointed to wind up EDIH.
The EDIH board would remain accountable until the end of the 2010/11 financial year, Chabane said.
Ompi Aphane, the director general for electricity, nuclear and clean energy at the department suggested that the "financial implications" of restructuring the EDI had become too onerous.
"Under the current circumstances it has become prudent to not strain the fiscus ... and some of these municipalities might become financially unviable due to the restructuring process," he said.
Aphane said the newly established department of energy was the obvious choice to become the "centre of all these activities" in terms of proper electricity distribution and that it would make it its task to "provide the services as intended".
He added that the decision to centralise supply management was also largely driven by a desire to see measures aimed at helping the poor implemented properly.
"What government has decided to do is to introduce something in terms of which the poor are cushioned from the increase in tariffs ... One of the elements in terms of which the poor can be cushioned is improvement in the providing of free basic services.
"These are some of these tariff rationalising initiaves. How this will be done - the modalities involve the introduction of regulations because tariffs are regulated under licence conditions," he said.
He added that it does not involve "any unbundling of Eskom".
Concerns about electricity distribution by local authorities was the main reason advanced by the Zuma administration last year for proposing a change to the Constitution to give central government wider powers to intervene at local level.
