Parliament and Pravin Gordhan shred DA’s electricity bill

Parliament has made short shrift of a DA-sponsored bill proposing the introduction of a privately owned electricity grid operator.

The Independent Electricity Management Operator Bill (IEMO), which was introduced on Tuesday by DA chief whip Natasha Mazzone, was discussed in a joint meeting of the committees on public enterprises and mineral resources and energy.

Public enterprises minister Pravin Gordhan, as well ANC and EFF members, roundly rejected the bill, disposing of it in just more than 90 minutes.

The IEMO Bill had a large number of similarities with the Eskom roadmap tabled by Gordhan a year ago, proposing the vertical disaggregation of Eskom into generation, distribution and transmission units to enable competition in generation, and the establishment of an independent grid operator and buying office.

A key objective of the separation of the three functions, which has been done by more than 30 countries, is to encourage competition by placing all electricity producers that sell their power to the grid operator on an equal footing.

However, a fundamental difference in the DA model was the provision that the state would not be permitted to be a shareholder in the grid operator.

DA member Kevin Mileham argued that the DA model was compatible with World Bank advice, which advocates that no market participant should be involved in the grid operator.

Gordhan disagreed, arguing that best practice globally is for the state to retain 100% ownership of the grid operator as this is regarded as a strategic asset.

“Both the intention of department of mineral resources and energy and the Eskom roadmap give us the same result as this bill, but the transmission component remains in the hands of the state as an important and strategic asset, while on the generation side there is a diversity that has already started, and there will be more going forward,” he said.

“We would not encourage any support for the bill; it is superfluous, does not do [anything] innovative and the same purposes can be served by ongoing processes that the government has already put in place.” 

Gordhan said that progress has been made by Eskom in the vertical disaggregation but that the government has asked the utility to accelerate its time lines, which CEO André de Ruyter has extended to be longer than the roadmap envisaged.

patonc@businesslive.co.za