Busa wants power stake

Wed, 11 Jun 2008

Business leaders called on the government on Tuesday to create opportunities for the private sector to invest in electricity services and prevent future problems.

"We run the risk of another crisis in the future," said Business Unity SA (Busa) chief executive Jerry Vilakazi, calling for a favourable regulatory environment for the private sector to invest.

"We should create sufficient conditions to attract the private sector to electricity distribution, not only in the supply chain but ultimately in the actual distribution of electricity," he told an electricity summit in Midrand.

Otherwise, he warned, there "may be more serious problems" in 15 years' time.

"We would like to envisage a point in time where the private sector plays a role in distribution."

Vilakazi said the private sector had more skills to offer than the government.

"(Business) wants to invest in the supply of electricity, but we will only do so if the environment is conducive for the private sector.

"We often observe with a deep sense of worry major (property) developments without any visible upgrade of power infrastructure," he said.

Vilakazi called for a "solid legislative framework to reinforce the emergency of the current situation" and said the legislation for the Regional Electricity Distributors (Reds) must be finalised as soon as possible. It was also necessary that clear standards be prescribed to the Reds.

The electricity distribution maintenance summit was discussing the implementation of the Reds, which would take over power distribution from municipalities. This would mean that consumers would pay their electricity bills to the Reds and not to municipalities. That would imply a loss of revenue to municipalities.

Deputy President Phumzile Mlambo-Ngcuka said on Monday there was "resistance" in the implementation of the Reds.

She moved to assure role players that their concerns would be addressed.

"There are mechanisms in place to ensure that municipalities and Eskom will not lose out,"

The Reds are to be established as public entities under the auspices of the Electricity Distribution Industry Holdings.

Cabinet approved the proposal to create six Reds in October 2006 but it had yet to be implemented. The proposal said Eskom and the municipalities would become shareholders in Reds, but that Eskom's shareholding should be reduced over time.

The two-day summit, which ends on Tuesday, heard on Monday that it would cost nearly R26-billion to catch up on a backlog of electricity infrastructure maintenance.

South Africa posted a growth rate of only 2.1 percent in the first quarter of this year, compared to 5.3 percent in the fourth quarter of last year, partly due to rolling electricity blackouts.