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Urgent need to accelerate electricity distribution industry restructuring

The Minister of Minerals and Energy, Buyelwa Sonjica and the Premier’s Co-ordinating Forum of the Western Cape have agreed on the urgent need to accelerate the restructuring of the electricity distribution industry. The parties agreed that this should be done to ensure that Government’s social and economic imperatives relating to reliable supply of energy, universal access to basic services and eradication of poverty are met sooner.

"The electricity distribution industry has a critical role to play in enhancing the economic and social development of our people. However, in its current state, whereby it is characterised by segmentation, unequal treatment of customers, where the poor subsidise the rich, as well as poor investment in infrastructure, it cannot be able to meet the social and economic objectives set by Government effectively. Thus, there is an urgent need for it to be restructured," said the Minister.

The Minister said this on Thursday, 2 August 2007, at the Premier’s Co-ordinating Forum meeting held in Mossel Bay. This forum was attended by, amongst others, the Premier of the Western Cape Ebrahim Rasool, who is also the Chairperson, MECs, Executive Mayors and Mayors, the Director-General of the Western Cape Provincial Government, heads of departments as well as municipal managers.

On her part, the Minister was accompanied by the Chairperson of the Board of EDI Holdings, Dolly Mokgatle and the Chief Executive Officer, Phindile Nzimande.

The meeting noted the importance of the Western Cape Premier’s Co-ordinating Forum providing the necessary support to ensure that the municipalities get ready to join the Reds (Regional Electricity Distribution) as well as monitor closely the process of the re-establishment of Red1 in line with the Cabinet Decision of 25 October 2006. In terms of this Cabinet Decision, six wall-to-wall Regional Electricity Distributors (Reds) must be established as public entities regulated by the National Energy Regulator of South Africa (Nersa).

Currently, EDI Holdings, together with the South African Local Government Association (Salga) are involved in an undertaking to re-establish Red1 in line with the said Cabinet Decision and to that effect, a Regional Engagement Forum (Ref) composed of Eskom and municipalities from the Western and Northern Cape Provinces was launched on 20 July 2007.

"The EDI restructuring process is very complex indeed and that is why we are committed to consulting with all stakeholders with a view to making sure that all their concerns are considered during the restructuring process. We have noted concerns such as making sure that municipalities and Eskom do not lose their revenue, that governance arrangements take into cognisance constitutional issues and that, when the Reds are eventually established, they do indeed meet the service delivery objectives set out by Government," Minister Sonjica added.

The Minister has already held similar meetings with the Premier’s Co-ordinating Forums of the Eastern Cape, Northern Cape and Gauteng provinces and all of them have pledged their full support to the Cabinet decision of 25 October 2006 and have also committed to work very closely with the Department of Minerals and Energy and EDI Holdings in ensuring the success of the restructuring process.