Eskom’s triumphantly announced profit is all very well but it comes on the back of sky-high tariff increases that are an existential crisis for industry, says Fanele Mondi, CEO of the Energy Intensive Users Group.
"I don’t want to take away from their performance improvement, but we need it to be reflected in lower tariffs," says Mondi, whose organisation represents the heavy hitters in industry, manufacturing and mining.
What companies require from Eskom is to stop impeding electricity reforms that are "not happening as quickly as we’d anticipated".
He mentions Eskom’s denial of grid access for private energy projects and attempts to stop the national regulator, Nersa, from granting trading licences.
The key to energy reform and competitive pricing is implementation of a wholesale electricity market by the national transmission company (NTC), which he says is waiting for Nersa to get its act together.
The NTC conducted consultations last year and went through the responses of stakeholders but Nersa is yet to publish the market code, Mondi says.
"According to the NTC, they wanted that in order to start operationalising as early as April 2026. If we are sitting in October and there’s not even a consultation paper on the market code, one wonders if that can still be achieved. In that sense there are delays in terms of market reform.
"If you consider that traders are likely to be the key players in the reform landscape, then Eskom’s challenge to Nersa’s approval of trading licences, which went all the way to court, also talks to these delays."
Likely to further delay the transformation of the energy sector is the seeming lack of a common understanding of the path ahead, says Mondi.
There is a feeling that stakeholders, including Eskom and Nersa, are "not all singing the same tune, probably because the hymn is not properly clarified".
"You have all these other aspects which tend to delay the transformation. For instance, the way the tariffs have been structured is having a negative impact on private generation projects, which were being developed."
Trade constraints slow down the execution of private sector projects, including the purchase of new generation by the independent power producer office.
"Faster grid expansion is critical. If we don’t have faster grid expansion, we’ll have Eskom forever holding on to its monopoly," Mondi says.
Grid expansion is not just about the physical infrastructure, he says. It’s about the rules that govern access to the grid and related fairness and equity issues.
"It’s a common perspective in the industry that Eskom is playing an obstructive role. Some of our members feel that where they have projects that require approval, they are not approved by Eskom for reasons that are not rational. The perception is that Eskom is trying to reserve grid capacity for themselves. This is also something Eskom needs to clarify."
In spite of Eskom suspending its court action against the granting of trading licences, he says this remains a threat.
"One is not sure about their reasons for staying the court case. Is it just because the minister of electricity [Kgosientsho Ramokgopa] put them under pressure? Or was this decision part of their own analysis to say, ‘Let’s give consultation an opportunity to resolve these issues’?
"If it’s only because of ministerial pressure, that means we’re always going to have this threat from Eskom, which adds to the uncertainty facing large power users about reforms to liberalise the market and bring in more energy.
"We need a strong, efficient Eskom, for the stable grid it provides certainly, during this transition period, but it shouldn’t come at the expense of reversing the reform gains we are seeing."
There are always going to be questions about whether Eskom can or will expand the grid at the required rate of 1,400km per annum, says Mondi.
So far, progress has been minimal and assuming "that we can start slow, but we’ll pick up", could be disastrous.
"Effectively it means additional generation will have to wait. We can’t afford to wait. Eskom has to hit the ground running and make sure they meet those annual performance targets."
Is he concerned that the reform process may be reversed?
"The minister’s assurances provide some level of comfort that the reforms will not be reversed, but politics being politics, you never know what’s going to happen from one administration to the next."
That’s why it is critical that the reforms become a fait accompli during the current administration, Mondi says.
"We need to ground as many achievements as we can during this period so that we can only move forward; we cannot reverse. If we’re wavering in the execution of these reforms, there will be that risk."
From a policy perspective, he thinks the process is safe.
"The devil is in the execution. The Electricity Reform Amendment Act might have its shortcomings, but it is setting a good ground from a legislative point of view to say this is where we’re going. And I don’t think it’s possible to reverse that.
"But the issue is how do you execute what is in the act. How fast do you develop a wholesale electricity market? The government has set the course; it’s for all the stakeholders now to make sure we execute on that set course."
Deindustrialisation is a "huge concern", he says, and the causes for it are still in place.
"Is something being done to arrest our deindustrialisation? Yes. Will it yield the intended results? Because we started this process so late, we do not know. Above all, it’s going to take a sense of urgency and political will from government."
Is he seeing that?
"There is no doubt that we would like to see a lot more. At the moment, we’re not seeing the transparency and inclusiveness and execution to match the urgency of our situation."
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