Section 34A of the Electricity Regulation Amendment Act requires that the independent transmission system operator (ITSO), as the licensed transmitter, control the network it operates, says business organisation Business Leadership South Africa (BLSA).

President Cyril Ramaphosa, in his February State of the Nation Address, confirmed that the new entity “will have ownership and control of transmission assets”, and the Presidency again reaffirmed this position in June, said BLSA CEO Busisiwe Mavuso in her weekly newsletter.

She said this in response to State-owned utility Eskom chairperson Mteto Nyati who reportedly said, first on social media and then in a radio interview, that Eskom's board of directors and “a Minister in that line” have concluded the assets should remain within the National Transmission Company South Africa and Eskom.

This is the same position Eskom had proposed in December, and which the President publicly overruled two months later, Mavuso pointed out.

“An operator that does not own the assets it manages, has no balance sheet of its own and, therefore, no capacity to raise the financing needed for the R440-billion transmission expansion South Africa urgently needs,” she said.

Such an operator would also remain permanently dependent on Eskom for its financial standing. Advocating for a dependent operator is at odds with agreed policy.

The ITSO is a public, published position, grounded in law. Business organisations advocate that Eskom's leadership follow the wishes of its shareholder and align with public policy, she said.

Eskom should not be allowed to act in conflict with agreed policy while frustrating a competitive electricity market that is in the public interest.

The reason for separating ownership from Eskom is to remove the conflict of interest that arises when the same entity is generator and gatekeeper of the grid. An entity that runs the network but does not own it cannot be relied on to treat every generator on it equally, said Mavuso.

Structural separation will ensure that insiders or incumbents are not favoured. When the operator of the transmission network is institutionally separate from electricity generation, it is better able to provide non-discriminatory access to all generators and to inspire confidence among investors that access decisions will be made impartially.

Advocacy for that separation is not a request for favourable treatment.

“We are not asking for anything beyond what Eskom's own shareholder has already made clear is public policy. We are asking that Eskom stick with that policy and implement the unbundling without further delay.

“Business cannot accept a rewriting of settled policy. Our positions have been published consistently and argued openly. They are available for anyone to scrutinise.

“We will continue to advocate for the full liberalisation of the electricity market,” said Mavuso.