SALGA and business groups differing views over Nersa’s electricity trading licences
The National Energy Regulator of South Africa’s (NERSA) decision to grant electricity trading licences to private entities has sparked fierce debate with Salga and Eskom raising concerns.
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A sharp divide has emerged between local government and business groups over the National Energy Regulator of South Africa’s (NERSA) decision to grant electricity trading licences to private entities.
The South African Local Government Association (SALGA) said it had deep concern over NERSA issuing licences before finalising trading rules, warning that the move poses a serious threat to the financial sustainability, constitutional mandate, and operational integrity of municipal electricity distribution systems.
SALGA, which represents municipalities, said finalised rules were essential to ensure “clear definitions of customer eligibility and trader rights; protection of redistributive and cross-subsidisation obligations embedded in municipal tariffs; [and] safeguards against predatory competition in licensed municipal areas of supply.”
Among its key concerns is the potential erosion of municipal revenue, which funds not only electricity services but roads, waste management, and water supply.
SALGA said, “allowing traders to target only high-value, reliable customers would leave municipalities with a disproportionate share of defaulting customers.”
SALGA also warned of “infringement of constitutional mandates” and called for Nersa to suspend the approval of further trading licences until a transparent and balanced regulatory framework is finalised and consulted upon.
However Business Leadership South Africa (BLSA) and Business Unity South Africa (BUSA) have urged Eskom to drop its legal challenges to the same licences. The organisations argue that litigation is undermining energy reform and delaying much-needed investment in new generation capacity.
“Eskom cannot be both the primary cause of our energy crisis and the gatekeeper of its solution,” said BLSA chief executive Busi Mavuso.
“South African businesses are failing, jobs are being lost, and our economy is stagnating. We need more power on the grid, now. For Eskom to spend public money on litigation designed to frustrate the very reforms government is championing and block the investment that can help secure cheaper and more secure energy is illogical and completely untenable.”
BUSA chief executive Khulekani Mathe said: “Our goal as a nation must be a reliable and affordable supply of electricity for every South African. This requires collaboration, not litigation.”
He called for Eskom to align its actions with the President’s Energy Action Plan and to support “a vibrant and competitive market that encourages much-needed additional investment… key to longer-term energy security and making South Africa globally competitive.”
While SALGA warns of “destabilising the sector” without firm rules, BLSA and BUSA insist that delaying private entry into the market will slow progress towards ending load-shedding and reviving the economy.