Eskom is a strong focus of the 2021 Budget, which emphasises the importance of the parastatal getting out of its debt rut – and the need for additional power-generation capacity.
Unlike the Land Bank, which got the R7-billion it asked for, Eskom did not get any new bailout – or in government speak, an equity injection. But then, the troubled power utility, in the 2019 Budget, received an annual inflation-adjusted R23-billion every year over the next 10 years, and a special appropriation of R56-billion over two years.
The additional long-term funding was linked to Eskom’s unbundling into transmission, generation and distribution entities under an Eskom Holdings umbrella. Seven months after the 2019 Budget, in October that year, the publically released Eskom roadmap set out what needed to happen.
The 2021 Budget Review document shows it’s finally at the point where a transmission entity will be legally separated by December 2021, followed by new generation and distribution legal entities a year later.
Already in place are the divisional boards responsible for strategy, performance and compliance, according to the Budget Review, in a process supervised by the directors-general of Treasury, mineral resources and energy and public enterprises alongside the Eskom CEO.
“Eskom remains dependent on government support and continues to [incur] debt to pay operational costs. It does not generate sufficient cash to meet its commitments… the utility faces serious operational challenges and is unable to meet the country’s electricity demand,” according to the Budget Review.
Energy reform, renewable bid window 5 and emergency self-generation have been highlighted as central to any economic recovery – also at the National Economic Development and Labour Council, which brings together government, labour, community and business.
Yet the Budget Review shows little urgency beyond that, saying it will be “soon” when mineral resources and energy announces the opening of bids for 2,000MW of renewable wind and solar power. The evaluation of applications for emergency power generation continues. “Within weeks” the government would announce the procurement of 11,813MW from independent power producers, including 6,800MW from renewable energy.
But it is on this energy front that Operation Vulindlela – a cooperative push by the Presidency and Treasury – comes into play. As it has done to reduce the time it took to get water, mining and prospecting permits, Operation Vulindlela is looking to “reduce the administrative burden” on energy projects under 50MW, to fast-track procurement of additional electricity, and to improve municipal distribution infrastructure “through private-sector investment”.
A national electricity planning and procurement framework is also mooted, in line with the government’s push towards a sector-organisation drive by trade and industry, through its master plans in areas from clothing and chicken to cement and sugar.
However, the Budget Review does not indicate any timelines or deadlines for these electricity reforms.
“Significant improvements” to South Africa’s rolling power outages can only be anticipated from September 2021, it says.
Last year (2020) was the worst year since 2015, recording 52 days compared with 103 in 2015. And 2021 kicked off with rolling power outages. DM