Linda Ensor
23 November 2007
Johannesburg — The government is to compel municipalities to invest a fixed percentage of electricity revenue in distribution infrastructure as they are failing to do so of their own volition.
The move is likely to meet with stiff resistance from municipalities, which jealously protect their areas of jurisdiction.
There are huge backlogs in municipal infrastructure investment, and dilapidation has caused the outages plaguing the country over the past few years.
Electricity supply has also lagged strong economic growth.
A regulation compelling municipalities to invest in infrastructure maintenance and rehabilitation would be published in about February, minerals and energy deputy director-general Nelisiwe Magubane said yesterday. The obligation to invest in infrastructure would be one of the conditions for municipalities' electricity distribution licences. Failure to invest would lead to penalties of up to R2m a day, or 10% of revenue.
While she expected municipal opposition, Magubane said the enabling legislation -- the Electricity Regulation Amendment Act -- had not been challenged in the Constitutional Court.
The South African Local Government Association (Salga) said that it would have to study the proposal and canvass the views of municipalities before it could comment.
Magubane said that municipalities were already required to ring-fence their electricity distribution activities.
She said the requirement to invest would apply whether municipalities or regional electricity distributors were responsible for distribution. The need for such a regulation has been highlighted in a comprehensive electricity master plan, which will map out the investment required to meet projected electricity demand up to 2026, taking into account the fixed investments planned in the public and private sectors.
At a media briefing at Parliament yesterday, the government's communications head Themba Maseko said that the cabinet had been briefed on a draft plan that took about a year to formulate, with the final version expected to be presented to it at its meeting on December 5. This plan envisaged growth in the electricity reserve margin from its current level of below 10% to about 19%.
The cabinet decided this week that further collaboration on the plan was required by the ministries of minerals and energy, water affairs and forestry, public enterprises, and trade and industry.
Magubane said there was a need for a long-term vision that would detail the kind of interventions required, the energy mix, skills and technology, as well as the future of SA's role as the major supplier of electricity to neighbouring states.
The plan would also project the growth in demand, taking into account population and residential housing trends and the development of particular sorts of industries such as aluminium smelting, mineral beneficiation and manufacturing.
The lack of a master plan in the past led to the present supply problems.
Magubane said that Eskom's existing five-year R150bn investment plan was the "tip of the iceberg" of SA's investment requirements for energy.
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