Public enterprise minister Gordhan releases Eskom's plan to produce cost-effective power

Public enterprises minister Pravin Gordhan
Public enterprises minister Pravin Gordhan

Eskom power stations will be grouped into clusters and compete among each other to produce cost-effective power and give consumers a better price.

This is one of the main changes contained in government plan for Eskom document released by public enterprise minister Pravin Gordhan on Tuesday .

Titled Roadmap for Eskom In a Reformed Electricity Supply Industry, the special papers flow in the announcement made by President Cyril Ramaphosa earlier this year to separate Eskom into three subsidiaries.

These are generation, transmission and distribution. Gordhan told journalists in Pretoria that Eskom was too big to fail and too important to be allowed to operate in the way it currently does.

“This is the beginning of the process… This is not Gordhan’s plan. It is a collaborate plan within government. What we are clear is that Eskom can’t remain what it is,” he said.

To reduce the monopoly that Eskom enjoys in generation, the stations , about 16, will be grouped into clusters for internal competition. Electricity will then be bought at a competitive price, allowing consumers to benefit from the process, the papers stated. Steps will be taken to ensure that power station improves the performance from the current 71% mostly to 80%.

Gordhan said the new plan is in line with government’s Integrated Resource Plan. Transmission will be separated from Eskom and this process is expected to be concluded by end of March next year. Eskom currently has between 5,000 to 6,000 workers maintaining 45,000km of wires which take electricity to where it is needed.

Transmission will include a buying component which includes purchasing power from independent producers. Transmission entity will have an interim board of three to five people to drive the change process. Gordhan said meetings have already started to ensure cost savings at Eskom. These include meetings with coal producers to find a cost-effective way of supply to power stations.

There will also be new processes to deal with procurement of parts which for some time had been overpriced. Eskom has been a trouble child for the South African government for about a decade. Its debt stands at over R450bn, posing a risk to the country’s economy.

The power utility has also struggled to deliver electricity as its old station breakdown and new ones badly designed, unable to provide electricity. Just last week, Eskom implemented load-shedding after its generation capacity could not meet current demand.

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