Business Leadership South Africa (BLSA) CEO Busisiwe Mavuso has called for policy follow-through to ensure that the restructuring under way in the electricity industry facilitates a transition to a market that is genuinely competitive and “not reform in name only”.

Writing in her weekly newsletter, Mavuso homed in on the importance that organised business was attaching to the creation of an independent transmission system operator (TSO), which also owned the grid assets, for the emergence of a competitive market.

The unbundling of Eskom was not straightforward, Mavuso wrote, acknowledging that lenders needed the assurance that restructuring would not undermine their creditor rights.

“But utility restructurings of this kind have been achieved successfully elsewhere in the world. Where there is genuine will, a way can be found.”

The BLSA intervention comes ahead of an end-of-June deadline set by President Cyril Ramaphosa for the Eskom Restructuring Task Team to finalise the unbundling approach and implementation plan for the creation of a TSO. The initial deadline of the end of May was not met.

In February, Ramaphosa used his State of the Nation Address to insist that the TSO would also own the grid assets in line with the Electricity Regulation Amendment Act.

This contradicted a plan announced by Eskom and the Electricity and Energy Minister Dr Kgosientsho Ramokgopa in December, stating that the National Transmission Company South Africa would remain an Eskom Holdings subsidiary and continue to own the grid assets.

The policy position of creating a TSO with grid assets was reiterated earlier this month, when the Eskom Restructuring Task Team published its terms of reference.

These also included a clause stating that Eskom should not be worse off financially following the unbundling, which is seen as a key focus area for the task team as its deadline looms.

The terms of reference were also published amid several reports by ratings agencies that included warnings about the potential credit risks associated with transferring the grid assets out of Eskom.

Mavuso reiterated organised business’s stance that the TSO should own the grid's assets, as such ownership would remove any possibility that the entity running the network could favour itself or a related party over competitors.

This, as Eskom moved to set up Eskom Green, amid persistent questions over whether the State-owned company’s renewables subsidiary was facing the same grid-access constraints that independent power producers were confronting.

She also provided two further “practical reasons” for supporting grid ownership by the TSO, with the first being that it was the clearest route to attracting major new investment into the grid infrastructure.

“Second, it is essential to a genuinely fair market – suppliers need confidence that they can access the grid on equal terms, without a competitor enjoying preferential treatment by virtue of owning the network they all depend on. An operator that runs the grid but doesn't own it is like asking a competitor in a race to also act as the umpire.”

A direct link was also drawn between competition in generation and the affordable tariffs required to counter the current deindustrialisation trend, which is largely being attributed to the fact that tariffs have increased tenfold since the advent of loadshedding 18 years ago.

“Electricity prices were unsustainably low before that period, which was part of why we saw such chronic underinvestment in generation capacity.

“But the answer now is a genuinely competitive market that lets price discovery happen properly, with multiple providers competing for customers,” Mavuso wrote, arguing that such a dynamic was essential to restoring economic competitiveness.

“Years of steep electricity price increases have eroded the competitiveness of many energy-intensive manufacturing sectors, accelerating deindustrialisation we can ill afford.

“Reversing that requires both a competitive electricity market and an independent transmission operator that all suppliers and consumers can genuinely trust.”