Businesses are sick of Eskom
Business Leadership South Africa (BLSA) and Business Unity South Africa (BUSA) have urged the government to step in and stop Eskom from trying to entrench its monopoly in the country.
The groups issued an open call for the government to protect the national energy reform programme and force Eskom to drop legal challenges against Nersa’s issuing of electricity trading licences.
Eskom launched legal challenges against the national energy regulator after it granted five trading licences to entities that would bring much-needed competition to the market.
The national utility launched the challenges on the grounds that the licences infringe on its licence rights, and go against Nersa’s conditions disallowing more than one licensee to provide electricity in the same area.
Eskom also flagged numerous other concerns with the licences, including that it would encourage companies to “cherry pick” high-value customers, and work against the national utility’s pricing structures.
Importantly, the competition in the market would disadvantage Eskom, potentially turning its finances and cross-subsidy structures on its head.
However, industry experts and now business groups have called Eskom out for litigating to protect its monopoly, with the added result of undermining the national energy reform programme that is supposed to help the country achieve energy security.
“These actions create uncertainty and send a negative signal to investors, delay critical energy projects, and ultimately may prolong the devastating economic and social impact of load shedding,” the business groups said.
The business lobbies said that the government’s policy position is to unbundle Eskom, encourage private sector investment in generation and transmission, and to create a competitive market to solve the energy crisis.
Eskom’s actions directly contradict this and undermine all these objectives, they said. “By legally challenging Nersa’s awarding of trading licenses, Eskom is actively working to protect its historical monopoly at the direct expense of a stable national power supply,” they said.
“Eskom cannot be both the primary cause of our energy crisis and the gatekeeper of its solution.” Eskom has repeatedly denied that it is acting in an anti-competitive manner with its court action.
Before launching the court action against the licences in October 2024, Eskom said that is committed to accelerating the reform of the rules to enable a competitive energy market.
However, it, like all other participants in the electricity industry, operates on established rules and “subscribes to a rule-based transition”.
It said that its adherence to the rules has been “misinterpreted as anti-competitive behaviour”. “Eskom will collaborate with various stakeholders to ensure that a competitive market is developed through a consultative legal framework,” it said at the time.
The government must step in
The business lobbies said that the government urgently needs to step in and put an end to Eskom’s approach.
BLSA and BUSA are urging the Minister of Electricity and Energy to engage Eskom’s board and relevant government entities to secure:
— An immediate cessation of all lawsuits and legal disputes initiated by Eskom against Nersa.
— A public commitment from Eskom to work collaboratively with all stakeholders to fast-track the integration of new generation capacity onto the national grid, in parallel with expanding the grid.
— Clear directives from the appropriate government authorities instructing Eskom to cease its anti-competitive and discriminatory behaviour and fully support the liberalisation of the energy sector.
BLSA chief executive Busi Mavuso, who previously served on the Eskom board, said that all South Africans are suffering due to business closures, job losses, rising costs and a stagnating economy.
Immense damage was done and continues to be done by limited power supply, and the impact of load shedding and load rotation.
Economists have repeatedly warned that South Africa’s stagnant growth trajectory will only continue as long as the national power grid cannot sustain more businesses and industries.
Energy experts have also warned that, without alternatives and new capacity, the national grid will continue to operate under severe strain, threatening the return of load shedding.
“For Eskom to spend public money on litigation designed to frustrate the very reforms government is championing, and to block the investment that can help secure cheaper and more secure energy is illogical and completely untenable,” Mavuso said.
“For Eskom to spend public money on litigation designed to frustrate the very reforms government is championing, and to block the investment that can help secure cheaper and more secure energy is illogical and completely untenable,” Mavuso said.