There is a danger that a bill that business regards as vital to enable private sector participation in the energy sector will not be processed by parliament under the present administration and will have to be dealt with after the 2024 general election.
So important does Business Unity SA (Busa) and Business for SA (B4SA) regard the Electricity Regulation Amendment Bill that they raised its speedy passage through parliament with President Cyril Ramaphosa at a recent meeting.
They see it as key to addressing the electricity crisis, which is one of the issues — together with crime and logistics — being addressed through a joint private sector-government initiative to remove constraints to economic growth.
Promulgation of the bill is vital for the impartial access of independent power producers to the grid and for the crucial expansion of the constrained transmission network. It will accelerate the liberalisation of the energy market and provide a national framework for wheeling (the distribution of electricity between private players).
The establishment of a transmission system operator will create a fair and transparent platform for the purchase of electricity without the conflict of interest stemming from Eskom being responsible for both generation and transmission.
A delay in finalising the bill will delay the unbundling of transmission from Eskom. The plan is to unbundle the utility into separate generation, distribution and transmission entities.
UCT Graduate School of Business professor Anton Eberhard expressed concern at the delay. He said that the bill is important to secure the future sustainability of the power sector. A separate transmission company would be able to raise capital for an expansion of the transmission network.
Ramaphosa promised the unbundling of Eskom in his 2019 state of the nation address, and it was prioritised by the national energy crisis committee.
The cabinet adopted the bill in March, and it was published in the Government Gazette in April.
Since then there has been an inexplicable delay for months in Gwede Mantashe, minister of mineral resources & energy, formally introducing the bill into parliament as required by the institution’s rules. The draft bill was submitted to speaker of the National Assembly Nosiviwe Mapisa-Nqakula and National Council of Provinces chair Amos Masondo in July for information and planning purposes only by their respective committees.
Foot-dragging
There is speculation that the deliberate delay by Mantashe relates to ideological antipathy by sections of the ANC towards the unbundling of Eskom, which they see as a form of privatisation, as well as his reluctance to facilitate the expansion of independent power generation. Mantashe is committed to coal-fired power stations, and has dragged his feet in expediting the introduction of independent power producers.
The chair of parliament’s mineral resources & energy committee, Sahlulele Luzipo, said on Wednesday that if the bill is not formally introduced in September, the committee would not have time before the general election to deal with it.
This would mean the bill would have to be revived by the new administration.
"[A]ny bill that is going to come after September ... I don’t see it passing through all the stages of this process [before the elections]," said Luzipo.
As the bill is a section 76 bill (in terms of the constitution), it will have to be processed by all the provincial legislatures as well as by the National Assembly, which will prolong its processing time.
Busa MD Cas Coovadia said business has identified the bill as one of the critical issues that needs to be unlocked, and it needs to be shepherded through parliament this year.
"We are obviously looking at avenues. We have raised this with the president. We have indicated to the president that it is a critical piece of legislation to enable the private sector-government partnership in electricity. The president noted this.
"We will continue to push."
Coovadia said that Ramaphosa will be asked to explain why the bill has not been tabled, where the blockages are and how they can be removed. "It is very high on the agenda for us," said Coovadia.
The bill essentially legislates government’s commitment to reform.
— James Mackay Energy Council of SA CEO
B4SA steering committee chair Martin Kingston is highly concerned, emphasising the need for the bill to be signed into law as soon as possible. "It represents a very significant, effective catalyst to addressing many of the issues and challenges we face in the current environment. It would be of concern to us if it were to be deferred," he said.
The bill, he said, has to be prioritised as a critical piece of legislation. "We were given no reason to believe when we met with the president that it wouldn’t receive urgent attention.
"There was no discussion about a potential delay."
Energy Council of SA CEO James Mackay said promulgation of the bill will send a signal that the government is moving in the right direction of fundamentally transforming the energy sector, which would mobilise a lot of international and local investment.
"The bill essentially legislates government’s commitment to reform," he said.
Senior parliamentary legal adviser Frank Jenkins, in his briefing of the committee on the parliamentary rules relating to the introduction of bills, stressed that there is a distinction between the submission of a bill for information purposes only (which assists committees and legislatures in planning their work) and the formal tabling of a bill, which has to go either to the speaker of the National Assembly or the chair of the National Council of Provinces, but not to both simultaneously.
Submission of a draft bill for information purposes is "not part of the constitutional legislative process".
Jenkins told MPs that it is the minister’s responsibility to introduce the bill in parliament.
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