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Electricity meets the Reserve Bank: The DA's answer to fix Eskom

Dec 04 2019 14:55
Khulekani Magubane

Beleaguered parastatal Eskom is wholly owned by the South African government. But when Democratic Alliance MP Natasha Mazzone briefed her peers about her private member's bill on energy on Tuesday, the power utility she envisioned bore more of a resemblance to the South African Reserve Bank than Eskom today. 

Mazzone was briefing Parliament's Portfolio Committee on Mineral Resources and Energy on her Independent Electricity Management Operator Bill (IEMO).

The bill gets many of its ideas from a previous bill introduced by government to Parliament in 2012 – the Independent System and Market Operator Bill (ISMO), which was withdrawn in 2014. 

Mazzone told the committee on Wednesday that her private member's bill is built on the foundation of its predecessor and would facilitate government's efforts to fix debt-laden power utility Eskom. 

Rather than Eskom's current structure, Mazzone prefers an arrangement like the SARB, where private shareholders exist but do not have a say in the running of the bank, whose mandate is determined by the Constitution.

"IEMO builds on the healthy foundation laid down by ISMO to achieve the breaking up of Eskom into more and better manageable entities, and is in line with policies of the national government," Mazzone told the committee.

Mazzone said the bill sought to establish the power utility as a private company, governed in terms of a public-private partnership, and insulated from both private sector manipulation and government interference.

Financial viability

"IEMO will manage the electricity system in an efficient manner that ensures financial viability," she said. 

"It will act as a trader of electricity in line with government policy and ensure efficient distribution within the integrated power system," said Mazzone.

She said the entity would function as a public-private partnership, similar to the Reserve Bank, to ensure that it would represent both private sector and government interests.

Appointments and performance bonuses would be independently controlled.

Mazzone said an independent energy operator was necessary because Eskom was in no position to fund the power generation capacity that South Africa's envisioned economic growth required.

More competition

"If Eskom were required to build all and fund all required new generation capacity, steep electricity price increases will be required, which will serve to the detriment of the end-users, who will foot the bill in the end," said Mazzone.

Mazzone said, through the IEMO bill, Independent Power Producers would be given the same access to the electricity market as Eskom, which would ease pressure on the state-owned power utility.

African National Congress MP Thokozile Malinga said she found much of the bill unnecessary, as the recently-published Integrated Resource Plan made provisions for IPPs, while the reorganisation of Eskom was ongoing. 

eskom  |  natasha mazzone  |  parliament  |  south africa
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