A significant increase of South Africa’s current expenditure on distribution infrastructure would be needed to ensure that the backlog in electricity distribution did not increase, EDI Holdings COO Willie de Beer said on Thursday.

Speaking at an electricity conference in Johannesburg, he noted that the overall backlog of South Africa’s entire distribution industry, including Eskom and municipalities, had stood at about R27,4-billion, in 2008.

The current level of investment in the domestic distribution industry could not support the country’s economic growth, noted De Beer.

De Beer and Copperbelt Energy Corporation CEO Neil Croucher agreed that the right balance had to be found in terms of funding both electricity generation, as well as electricity distribution.

De Beer explained that while power outages in South Africa were often only attributed to generation constraints, a number of power outages have also been caused by distribution constraints.

He warned that if South Africa only focused on increasing its generation capacity and not its distribution capacity in the next few years, the country would still face electricity problems in the coming years.

An Eskom representative, however, said that the utility has recognised that it would need to bring on additional transmission and distribution capacity when its Medupi and Kusile power plants come on line and that planning for this was under way.

Croucher, meanwhile, told delegates at the conference that there was a massive shortfall in funding for electricity distribution purposes and that transmission and distribution were often the last in line to be allocated funding.

He noted that this was especially the case in municipalities, where revenues from electricity sales were often used to crosssubsidise other areas that the municipality had to fund.

This would have to be stopped, or at least reduced, he stated.

ESKOM DISTRIBUTION

Meanwhile, Eskom GM of business strategy and implementation Andrew Etzinger said that despite the State-owned utility’s funding issues, its expenditure on transmission and distribution would remain robust.

He noted that demand for electricity would continue to grow by about 3% a year and that it did not expect to see a decline in electricity usage, despite the recent tariff increases approved by the National Energy Regulator of South Africa.

Etzinger said that the utility had continued to see the number of applications for new electricity connections rising, despite the global and domestic economic downturn.

Eskom would increase its expenditure on new connections to R5,4-billion a year, up from the current R3,1-billion a year, in the next five years.

Further, given the R10-billion backlog it was facing in terms of the refurbishment of its transmission and distribution infrastructure, it would increase expenditure for this to R2,3-billion a year, up from the current R1,5-billion a year.

In terms of Eskom’s latest transmission development plan up to 2019, it would need to install an additional 6 770 km of 765-kV transmission lines and 8 355 km of 400-kV transmission lines, as well as about 130 new transformers.

An investment of about R87,3-billion would be needed for expanding transmission capacity in the next five years.

This would increase to R175-billion up to 2019.

Meanwhile, Etzinger highlighted that the power utility was losing about R1,2-billion a year, or 2,3% of its electricity sales, to illegal connections and the theft of electricity, each year.

The utility had identified hot spots where these activities were taking place and was trying to mitigate this.