By Akani Nkuna
President Cyril Ramaphosa has said the next phase of electricity reform will focus on driving down electricity prices through the establishment of a competitive electricity market, where multiple generators are brought into the market and compete to supply electricity.
PHOTO: X/GettyImages
“Competition between generators, combined with expanded transmission capacity and continued investment in new generation, must ultimately produce a more efficient electricity system and put downward pressure on the cost of power,” he said.
“The reforms implemented through the Energy Action Plan have already unlocked unprecedented investment in new generation capacity.
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“But a competitive electricity market also requires a transmission system that is independent, efficient and capable of providing fair access to all market participants.”
Ramaphosa was speaking at the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) Presidential Business Breakfast at the Radisson Hotel OR Tambo in Ekurhuleni on Thursday.
The event brought together leaders from organised business and labour, as well as representatives of the metals, engineering and capital equipment industries.
The president said South Africa’s Wholesale Electricity Market was expected to begin operating next year, adding that government had established the Eskom Restructuring Task Team to oversee the detailed work required to establish a fully independent, state-owned transmission company.
He said the process aimed to achieve three objectives: minimise financial, operational, and fiscal risk, strengthen energy security, and contribute to reducing the cost of electricity.
“We will undertake this restructuring carefully and responsibly.
“We will safeguard the financial sustainability of Eskom.
“We will protect energy security.
“And we will ensure that workers are treated fairly,” Ramaphosa said.
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He also called on South Africa to locally develop and manufacture technology required for the new energy economy where the country has the capability, or can realistically develop it.
He said the country’s renewable energy programme could support domestic production of towers, transformers, cables, switchgear, structural steel and other electrical equipment.
Around 14,000 kilometres of new transmission lines are needed in South Africa over the next decade, together with major investment in substations and transformation capacity, according to Ramaphosa.
He said the transmission expansion was an opportunity to rebuild and expand the country’s existing industrial capabilities, while creating jobs, apprenticeships and training opportunities.
“Our engineering capabilities position us to participate in emerging industries such as battery manufacturing and green hydrogen.
“And nowhere is the industrial opportunity more immediate than in the expansion of our electricity transmission network,” Ramaphosa said.
He said the transmission programme was one that “should become one of the great industrial projects of our generation”.
The president also called for South Africa’s industrial capabilities to be reflected in the country’s rail engineering and rebuilding programmes, including increased manufacturing of locomotives, wagons, wheels, axles, signalling equipment and components.
South Africa is also operationalising the South African National Water Resources Infrastructure Agency as government implements reforms aimed at addressing the country’s water challenges.
Ramaphosa said that through national grants alone, government was investing approximately R24 billion a year in municipal water and sanitation infrastructure, with hundreds of projects underway across the country.
Further investment was being mobilised through public-private partnerships and new financing mechanisms.
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The investment would create demand for pipes, pumps, valves, treatment equipment, structural steel, engineering services and construction materials, creating further opportunities for the metals and engineering sector.
“The same applies to our ports. Significant investment is being directed towards port infrastructure, cranes, handling equipment and terminal modernisation as we advance reforms in the port system. And the same applies to water,” Ramaphosa said.
