Government’s plan to create a second Eskom is “utter madness”

The government’s plan to set up a new state-owned electricity generation entity separate to Eskom is “utter madness”, according to Democratic Alliance (DA) shadow minister of mineral resources and energy Kevin Mileham.

“The Democratic Alliance (DA) unequivocally rejects statements attributed to the Minister of Mineral Resources and Energy, Gwede Mantashe, that the ANC Government is looking to set up an alternative electricity generation entity,” Mileham said.

“This is utter madness. Instead of making the South African electricity supply sector more competitive, the government is seeking to extend its monopoly over electricity generation.”

Speaking at the Mining Indaba in Cape Town on Monday, Mantashe said that government plans to seek investors for the creation of a separate generation company as a “security measure.”

“As Eskom is grappling with all the electricity crises and problems, we must have a fail-safe option of giving energy, particularly with the pressure to close a number of coal-generating power stations,” Mantashe said.

Mantashe said that in one year’s time, the government hopes to have a second power utility outside of Eskom.

The Minister also said that the government is considering allowing mining companies to generate electricity for their own use.

“You will not need a license for that, you will just need to register and you run ahead,” Mantashe stated.

The Department of Energy is currently in the process of passing a revised schedule of the Electricity Regulation Act, which should give effect to the plans announced by Mantashe.

“We don’t need another Eskom”

Mileham argued that South Africa does not need another state-owned power utility, and should instead rely on Independent Power Producers (IPPs).

“South Africa doesn’t need another state-controlled entity for electricity generation when there is a myriad of Independent Power Producers (IPPs) who are ready and willing to generate electricity in order to diversify South Africa’s energy mix, making it more reliable and cheaper,” he said.

“Furthermore, the Minister’s comments that Government is planning on revising Schedule 2 of the Electricity Regulation Act to enable mines to generate electricity for own use is an admission by the ANC that Eskom’s monopolistic stranglehold on the energy sector is simply not feasible.”

Mileham added that while the DA agrees that Schedule 2 should be amended to allow self-generation and municipal generation, this will still not address Eskom’s massive debt, skills deficit, and ageing infrastructure.

“What South Africa needs is a competitive electricity generation sector to ensure energy security,” he said.

“The Minister must not make empty commitments just to reassure the people in this time of rolling blackouts that are crippling our economy. He must put his money where his mouth is and take action.”

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Government’s plan to create a second Eskom is “utter madness”