When it comes to policymaking and implementation, the opera isn’t over until the voluptuous lady has sung. What’s happening with the restructuring of Eskom is a case in point.
In line with what President Cyril Ramaphosa set out in 2019, Eskom is meant to be separated into three operations: generation, transmission and distribution. The intent is to enable private sector investment in electricity generation and transmission, the latter being crucial for levelling the playing field for new entrants in the energy sector.
The key here is ensuring that the transmission network (which is under Eskom’s control) doesn’t favour the incumbent generator of electricity (Eskom). The governance — running and regulating the transmission network, the transportation of electricity at high voltages from the generation point to near where it will be used — must therefore be transparent and fair.
Given that electricity is mostly generated far from the main centres of its usage in South Africa, a transmission network is important. If transmission remains under the control of an incumbent, such control could be used to discriminate against electricity generation competitors. For example, decisions on where to invest in the building or upgrade of a transmission network could be used to put newcomer competitors at a disadvantage versus the generation units of the incumbent.
The reform of the electricity industry is a complex endeavour globally, in part because reforms often threaten the interest of incumbent stakeholders, including management, organised labour and existing suppliers (and their associates). In South Africa’s case “associates” often include politicians.
These complexities are further magnified in South Africa’s case by the country’s commitment to transition from fossil fuel to cleaner energy sources. This means that most new entrants into generation will be using clean and renewable energy sources, which threaten Eskom’s (fossil-based) generation. This risk could induce Eskom’s stakeholders to push for a delay in the restructuring of the utility.
You may ask: has the presidency suddenly woken up to the complexity of the Eskom restructuring? Not really. The issue here is that the implementation stage is where reality hits the incumbents the hardest.
What’s known publicly is that the unbundling of Eskom has been modified, away from what Ramaphosa first announced in 2019 — that is, the separation of the transmission network from Eskom. Electricity & energy minister Kgosientsho Ramokgopa approved a revised strategy for Eskom’s unbundling last December. Eskom framed this move as a step that would enable “more efficient service delivery, greater competition, and enhanced policy and investor certainty to drive reindustrialisation and economic growth”.
The net effect of this, and other actions that may not have been visible publicly, has been a slowdown in the pace of Eskom’s restructuring, as noted in the latest Operation Vulindlela review. The head of the project management office in the presidency, Rudi Dicks, has been quoted in the media saying the restructuring is “complex”.
You may ask: has the presidency suddenly woken up to the complexity of the Eskom restructuring? Not really. The issue here is that the implementation stage is where reality hits the incumbents the hardest. According to the authors of “The Public Policy Primer”, it’s the stage of the policy process “where the stakes of winning or losing begin to manifest themselves very clearly to many participants”.
In short, the voluptuous lady is still singing. We should therefore expect more efforts, both surreptitious and above-board, at slowing down the pace of Eskom’s restructuring. If stalling reform fails, the next point of attack will be the National Energy Regulator of South Africa. Nothing will be done that might waken Sleeping Beauty from her slumber.
• Sikhakhane, a former spokesperson for the finance minister, the National Treasury and South African Reserve Bank, is editor of The Conversation Africa. He writes in his personal capacity.
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