South Africa needs to spend R35 billion to maintain neglected distribution networks, or risk further backlogs, the Free Market Foundation warned on Tuesday (9 October).<\/p>\n
“We’re in a serious situation,” the lobby group’s spokesman Eustace Davie told reporters in Johannesburg.<\/p>\n
Electricity was used by local governments to cross-subsidise other goods, he explained. In addition, a decade-long attempt to restructure distribution meant municipalities had no incentive to invest in electricity infrastructure when they might not benefit.<\/p>\n
As a result, spending on the grid itself had been neglected. Davie recommended municipalities should either contract out the maintenance, or sell off the grid.<\/p>\n
Doug Kuni, MD of the Independent Power Producers’ Association, said economic growth depended on growing the electricity supply. Currently, some 5000MW was lacking in the economy.<\/p>\n
“You cannot grow your economy without new electricity,” he emphasised.<\/p>\n
Eskom’s strategy of buying back power from large energy users was keeping the lights on, but at the cost of economic growth.<\/p>\n
Blackouts in 2007 and 2008 had cost the economy between R50 billion and R119 billion, he said.<\/p>\n
But independent power producers could not distribute power directly to consumers without Eskom, which owned the grid.<\/p>\n
The solution was to establish an independent grid, either under government control or at least partially privatised.<\/p>\n
Consumers would benefit, as producers could compete to deliver energy at the lowest price, Davie said.<\/p>\n
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