President Cyril Ramaphosa has signed into law the Electricity Regulation Amendment Bill at the weekend, which is meant to create a competitive electricity market. The bill amends the Electricity Regulation act of 2006 to “open up pathways to greater competition and reduced energy costs; increase investment in new generation capacity to achieve energy security; establish an independent transmission company as the “custodian of the national grid; and impose severe penalties for damage to and sabotage of infrastructure”.
The act provides for the establishment, duties, powers, and functions of the Transmission System Operator SOC Ltd (TSO) – which must be established as an independent entity within five years – and for the National Transmission Company of South Africa to act as the TSO in the interim. It also provides for an open market platform that allows for competitive, wholesale or retail buying and selling of electricity. The Presidency said: “The act provides for market operation as a new activity that may be licensed by the National Energy Regulator of South Africa (Nersa). In addition, it requires the development of a Market Code that will establish rules to govern the future competitive market, and outlines the process through which the code will be approved. The act further clarifies the principles that apply to the setting or approval of prices, charges and tariffs.”
Things are changing in terms of how electric power is run in South Africa. By setting up a Transmission System Operator SOC Ltd (TSO) they are going through the process of having electricity privatized. The purpose of a TSO must be to serve as an overseer of an independent private energy-market. A market that can sustain itself and grow through competition within a legal framework. The creation of an open market platform is mean to create a new market based on the privatization of managing the country’s energy resources. The new market comes with its own rules and ethics that still have to be worked out but still have to be created to along with new value electricity will have on the private market. Government will act as a regulator and mediator in this new market rather than as a manager.
Meanwhile, those found damaging, removing or destroying any transmission, distribution or reticulation cable, equipment or infrastructure could face fines of up to R1 million, five years in prison or both. “Penalties for persons who unlawfully receive such cables, equipment or infrastructure face fines of up to R5 million or 10 years in prison or both,” the Presidency said. In light of the government’s rapid move towards a competitive energy market, experts have expressed concern as private independent power producer (IPP) projects race to grab up already limited grid space. This after Nersa recently rejected Eskom’s application for grid capacity reservation, which was part of its efforts to “protect public procurement programmes and improve their prospects of success”. The Alternative Information and Development Centre (AIDC) at the time also raised concerns about the risk of market concentration as larger companies enter the competitive electricity market first.
They further raised concerns about Eskom’s long-term viability, given the potential impact of declining demand and rising costs.
The destruction and theft of electric cables was also highlighted in the amendment. The law is becoming more stricter in this regard. No more tolerance of this disruptive and abominable crime. All eyes will now fall on the police who are expected to enforce such new legislation. Fines of up to R1 million, will not be easy to pay up if you are desperately poor enough to steal an electric cable so that leaves you would be facing a jail sentence of ten years or more. The government needs to come up with a better plan to tackle poverty and alleviate the underlying issues of unemployment. The new law comes at a time when many naysayers were warning of a grid collapse. Will the ERA bill take the power gride in a new direction? Will it lead to a reduction in load shedding? It will certainly reduce Eskom’s scope in economic power over the electric grid.
Could this bill give private companies more say in how the power grid operates? If so, it will lead to a break down in Eskom’s monopoly. The Utility company could become redundant in time.
President Ramaphosa is also to sign the second Presidential Health Compact at the Union Buildings in Pretoria.
The Presidential Health Compact is an initiative established by President Ramaphosa in 2019. It is a framework of cooperation between critical sectors in South Africa that significantly influences good health outcomes. According to the Presidency, it also monitors and evaluates components where roles and responsibilities are assigned to various stakeholders to support the strengthening of health systems and preparation for implementing the National Health Insurance (NHI). The second compact follows the 2023 Presidential Health Summit, which built on the inaugural summit of 2018 and brought together several stakeholders. These include government, business, labour, civil society, health professionals, unions, service users, statutory councils, academia, and researchers to develop sustainable and inclusive solutions to challenges in the national health system. The stakeholders involved in this framework are integral to supporting the Department of Health in improving the health system.
It initially consisted of nine pillars, with the 10th pillar added during last year’s summit.
The creation and signing of the Presidential Health Compact, is in accordance with the National Health Insurance (NHI) bill. It is meant to provide a mechanism to bridge the NHI bill to the reality of the medical establishment. The critical sectors mentioned above which are the private sector (companies) involved in creating medical tools, public and private hospitals and the profession of doctors and nurses. The Health Compact is to be an umbrella law that binds the medical establishment to the NHI bill within reason. The careers of doctors will be going under microscope with this legislation to ensure their profession and integrity. So, it is good that the presidency and the Health Department underwent a process of consulting, informing and educating concerning the bill. All areas of scholarly note both from the medical and legal circles would have had their say.
The pillars mentioned above refers to the basic foundations of the framework of the compact bill. Now both laws have been put in to practice and their success will be determined by how both the government, the public and private sectors carry them out.
Article written by:
Yacoob Cassim
Journalist at Radio Al Ansaar
