South Africa’s newly established Ministry of Electricity and Energy, Minister Dr. Kgosientsho Ramokgopa has revealed a detailed significant challenges and strategic plans to revamp the country’s energy distribution system. Despite notable improvements in energy availability and a reduction in unplanned outages, South Africa struggles with a new crisis related to municipal energy distribution, tariff affordability, and increasing public debt.
During his first public briefing as the head of the standalone ministry on July 8, Minister Ramokgopa underscored the critical state of municipal infrastructure, which suffers from underinvestment and mismanagement. He noted that many municipalities are not maintaining their energy infrastructure adequately, leading to frequent power cuts and reduced electricity supply to numerous households. These issues are compounded by increasing energy tariffs, which have forced many poorer households to choose between purchasing electricity and essential goods like food.
The economic impact of these challenges is severe, with municipalities reporting a staggering R78 billion in arrears to Eskom, the national power utility, as of the end of May. Without intervention, the Minister warned, these debts could balloon to over R3 trillion by 2050, posing a dire threat to the nation’s economic stability.
To combat these issues, the Ministry is focusing on several key areas. First, a comprehensive review of the electricity tariff model is underway to address affordability and ensure sustainable revenue for municipalities. This includes rethinking how electricity prices are structured to prevent further erosion of municipal incomes and alleviate the burden on households.
Second, the government is set to finalize a funding model aimed at mitigating losses through distribution reforms. These reforms will likely include the integration of renewable energy solutions for large power consumers. Ramokgopa highlighted the potential for “mega bid windows” for renewable energy procurement, which he believes will modernize the energy sector, enhance distribution efficiency, and expand access to affordable electricity.
Furthermore, the Department is developing an electricity distribution industry restructuring roadmap. This initiative, in collaboration with local municipalities, the South African Local Government Association, and other relevant government bodies, aims to address the pressing issues of mismanagement and inadequate investment. Modernization efforts such as the installation of smart meters, development of flexible grids, and other demand-side solutions are expected to reduce municipal debt and lower consumer costs.
Minister Ramokgopa also emphasized the dual role of the distribution sector: to drive economic growth and to ensure social equity by providing affordable energy. He pointed out the need for dedicated investments in electricity infrastructure, which is crucial for maintaining system reliability and efficiency.
On the performance front, Eskom has shown progress, improving the Energy Availability Factor (EAF) from 54.5% last year to 61.5% this year. Unplanned capacity losses have also decreased significantly, from 17,000 MW last year to 12,000 MW, thanks to robust recovery efforts at coal-fired power stations. Notably, the reduction in load shedding occurrences and decreased expenditure on diesel for open-cycle gas turbines have been highlighted as signs of improvement.
The briefing concluded with the Minister reaffirming the government’s commitment to overcoming these distribution challenges through strategic reforms and a pivot towards renewable energy. This holistic approach is seen as vital for stabilizing the energy sector and ensuring it supports both the economic and social needs of the country.
