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- South Africa’s newly appointed Minister of Electricity and Energy, Dr. Kgosientsho Ramokgopa, held an inaugural media briefing yesterday at the GCIS in Pretoria.
- The minister highlighted that the R78 billion debt owed to Eskom by municipalities must be urgently addressed to protect the ability of the power utility to fulfil its mandate.
- He said that distribution at municipal level is major challenge and that they are considering the implementation of mega bid windows to procure renewable energy at scale.
“Collectively, municipalities are owing Eskom R78 billion and…a lot of this is irrecoverable. There’s no possibility under the sun that we are going to collect that R78 billion. It’s important that we resolve this picture. This picture presents problems for Eskom. Eskom needs this money for it to be able to reinvest back into its own infrastructure. Municipalities have to pay that money…but on an objective ground, they simply don’t have the means to be able to pay,” said Ramokgopa
Ramokgopa said the current trajectory of the debt owed to Eskom poses a threat to the existence of the power utility in the future.
“To give you the magnitude of the problem, if we don’t resolve this problem, our projection is that at the current rate, by 2050, Eskom will be owed R3.1 trillion. Eskom will collapse. Generation capacity is going to be compromised. So, it’s important that we resolve this question.
“This is the most urgent task that is confronting us. It is municipality related but we can’t fold our arms, we need to help them from a technical point of view.”
He emphasised that continued non-payment is affecting Eskom’s ability to address distribution infrastructure needs – leading to the implementation of load reduction. Load reduction is implemented in areas when the demand is higher than the infrastructure is able to handle.
“In the solution, we must protect the interests of Eskom as a going concern, ensure that municipalities are able to collect [revenue]but also protect the interests of the user. Because when that distribution infrastructure fails that is providing electricity to 50 houses, there’ll be 10 to 20 houses that have been paying diligently but they are collateral damage.
“The biggest victims of all of that is the end consumer and, by definition, is the South African economy,” he said. The Minister said the department, together with municipal leaders will address the challenge of electricity affordability and access to allow municipalities to be able to collect revenue.
Distribution at municipal level is a major challenge
Ramokgopa said the electricity distribution at municipal level is a major challenge. He said that some municipalities mismanage this sector and invest too little in maintenance and modernisation.
“Distribution is our albatross…it’s on a mode of self-destruction and the casualties are the poor. They are the ones that are subjected to conditions of load reduction in the main and even those who are diligent payers are subjected to load reduction. This can’t continue any further. It’s important that we arrest it so that we are able to ensure that the country is able to achieve its developmental objectives,” he said.
100 days of no loadshedding
Ramokgopa said that while it is commendable that the 100 day milestone of no load shedding has been achieved in the country; it is also a chance to reflect on the hard work that has gone into addressing the problem.
“We were able to register that milestone…of 100 consecutive days without load shedding. It’s not a moment of celebration. But it’s [a moment]for us to take stock of where we came from and the fact that interventions are working and they are beginning to illustrate that indeed it can be done. It’s done…principally by Eskom engineers with little assistance from outside. Yes, there’s that framework from NECOM [National Energy Crisis Committee] getting assistance from outside but fundamentally, it’s driven by Eskom employees,” he said.
“It all has to do with the performance of these coal fired power stations and the work that the team has done to ensure that we are able to address this situation,” he said
The minister did not mention that the demand for Eskom electricity has dropped significantly as many households and business choose to self generate power at point of use through solar PV/battery/diesel generator hybrid systems. Now that there is no limit on capacity for private power generation without a license, large corporates are procuring power from IPP’s and energy traders through national wheeling a banking schemes. This has resulted in a 2GW+ drop in demand for Eskom generated power which has contributed to the utilities better performance in the last four months.
Eskom power demand outlook leading into Q1 2025. Image credit: Eskom
Renewable energy procurement at scale
Ramokgopa said that he foresees the possibility of ‘mega bid windows’ to accelerate the procurement of renewable energy capacity at scale. He said this would contribute to distribution grid modernisation, make the cost of electricity more affordable plus improve access. “I really am not of the opinion of going out to the market in bits and pieces, I believe in a mega-bid window, ” he said. He did not provide details on scale and timelines.
The minister elaborated that he wanted to understand and resolve the experiences and the hurdles associated with previous bid windows where successful bidders have not been able to reach financial close. “I want us to resolve those. I don’t think it’s going to take us long… I’m sure they’ve documented them somewhere,” he said.
Under his predecessors tenure as energy minister over the last five years, the country’s once respected IPP procurement programme fell into disarray through incompetence, mismanagement and allegations of corruption which worsened the energy crisis considerably. Read more
Author: Bryan Groenendaal
