Amidst stage 6 loadshedding and the approval of an 18.65% tariff increase by NERSA, the Deputy President of South Africa has announced plans to move Eskom under the Department of Mineral Resources and Energy. During the announcement, government confirmed plans to scrap the Department of Public Enterprises, and move all State Owned Enterprises into their relevant government departments.
The move is intended to provide “better alignment and oversight” between the embattled energy company and the DMRE, with hopes of ultimately improving the current energy crisis. Plans are in place to reorganise the structure of Eskom to “better align with their mandate”, with the State-Owned Enterprises Council set to advise on the “appropriate shareholder models and repositioning of state-owned companies as effective instruments of economic transformation and development”.
The move has been met with harsh criticism from various role-players and the public at large, with some calling the plan “irrational and disastrous”. It has been pointed out that there would be an obvious conflict of interest with an energy ministry being both Eskom’s shareholder and being responsible for competition and regulation in the sector. This poses the threat of severely curtailed private power generation and threatens open power exchange in the South African markets. Those in the private sector have voiced concerns that the move will also threaten investment opportunities and lead to further breakdowns in the current energy supply, increasing loadshedding and the energy insecurity of the country at large.
Furthermore, the move would place Eskom in the close hands of the energy minister, Gwede Mantashe, who has remained a keen proponent of coal-fired powered stations and advocate for the retention of South Africa’s coal-fired power plants to remain. This move may therefore put a break on South Africa’s transition to renewable energy.
Given that the details of the move are still uncertain, the specific financial and practical ramifications on South Africa’s energy supply remain to be seen.
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