What the future holds for Eskom as SA moves to liberalize energy market

South Africa is facing significant challenges and opportunities in its energy sector as the country moves towards liberalizing the market and transitioning to cleaner energy sources. The recent conversation with South Africa's Energy Minister, Gwede Mantashe, shed light on the government's plans for deregulating the power market. Peter Attard Montalto, Head of Capital Markets Research at Intellidex, joined CNBC Africa to provide further insights on the topic. The discussion revolved around the need for updating the Integrated Resource Plan (IRP), the impact of COVID-19 restrictions on the economy, and the future of Eskom in a changing energy landscape. Montalto expressed his concerns about the government's response to the COVID-19 pandemic, emphasizing that the restrictions should have been implemented earlier to curb the spread of the virus effectively. He highlighted the economic implications of the lockdown measures, stating that while the hospitality sector might suffer, overall economic growth may still be resilient. The focus then shifted to the importance of updating the IRP to reflect current market dynamics and technological advancements in the energy sector. Montalto emphasized the need for a more flexible and adaptive approach to the IRP, suggesting that regular updates every two years could better align the plan with evolving energy trends. He also pointed out the potential benefits of faster decommissioning of old energy infrastructure to attract international funding for a just transition to cleaner energy. Discussing the challenges of liberalizing the energy market, Montalto addressed political opposition within the government and alliance to opening up the market and reducing the role of Eskom. He emphasized the importance of moving towards a more liberalized energy system to drive industrialization and job growth in South Africa. Despite concerns about losing control, Montalto believed that Eskom could play a vital role in managing the transition to cleaner energy. The conversation also touched upon the potential obsolescence of Eskom in its current form due to technological advancements and changing market dynamics. Montalto clarified that while Eskom's role may evolve, it still has a significant role to play in managing the energy transition and ensuring grid stability. Looking ahead, Montalto discussed the upcoming regulations around the deregulation of the electricity market, highlighting the significance of Schedule Two of the Electricity Regulation. He anticipated the gazetting of these regulations within 60 days and emphasized the need for clarity on key issues such as wheeling and grid access for energy buyers and sellers. Overall, the discussion with Peter Attard Montalto provided valuable insights into the challenges and opportunities facing South Africa's energy market. As the country navigates the transition to cleaner energy sources and liberalizes its power market, stakeholders will need to collaborate effectively to drive sustainable economic growth and job creation in the energy sector.