The Sting in the Power Tail

Hidden: The Cost of Private Transmission Projects Will Be Passed Directly to Consumers

- Antoinette Slabbert

The announcement by Energy and Electricity Minister Kgosientsho Ramokgopa that the government will in July call for bids from the private sector to build, operate and transfer transmission lines—which will mark the first private sector participation in grid extension—has been widely welcomed.

Finding itself with empty pockets, the government will be able to leverage the balance sheets of private sector companies to extend the grid while retaining ownership.

This will supplement the limited capacity at Eskom's subsidiary, the National Transmission Company of South Africa, to build new lines every year, Ramokgopa said.

In the previous financial year, Eskom built a mere 74km, down from 326km the year before.

As with the government programme to purchase renewable energy from independent power producers (REIPPP), the department of energy and electricity will do the procurement while Eskom will be the buyer of the electrons and now the grid services.

Eskom, in turn, will pass the cost on to the consumer through electricity tariffs.

It has been done before and has been working fairly well. Or has it? And for whom?