Eskom unbundling must lead to private-public sector union – expert

Unbundling of national electricity utility Eskom need not amount to total privatisation.

According to Brazilian energy expert Dr Luiz Antonio Ugenda Sanchez, unbundling in South Africa required a proportional balance between public sector and private sector participation.

For the developing world, unbundling was the key word in the energy sector, where the four pillars, generation, transmission, distribution and commercialisation, could see private resources and expertise assist government in creating more technically efficient economies.

“You need to unbundle in an effort to bring private capital and different actors into this field,” he said.

Sanches said that South Africa’s seemingly unending multibillion-rand public energy build projects was nothing unique in the developing and developed world.

“We had a similar situation in the 1990s in Brazil in our power sector. We had a huge [state utility] and we began unbundling. But unbundling to separate the different areas.

“Why we did it was because we had huge hydroelectric system in Brazil because we have a lot of rivers, but we also had a lot of situations where we could create power out of sugar cane.

“We had renewable energy. In Brazil we have a very strong renewable energy sector and we have a lot of experience with renewable energy – hydro, sugar cane and ethanol as well.”

The key to unlocking the potential of unbundling for Brazil was its vast resources for renewable energy generation.

But without infrastructure and proper planning, examples such as Angola showed that unbundling was not an option for countries which were underresourced.

While the South African government has, at least for the past five years, emphasised the need for a diversified energy mix in generation, some people have argued that prioritising in renewable energy sources over coal would make consumers pay more.

But according to Sanchez, at least in the case of Brazil, energy generation has seen particular benefits from diversified ownership, as well as a diverse energy resource base.

He said South Africa showed potential for growth in renewable energy, particularly in hydroelectricity technology.

“I don’t know if you have big enough transmission lines to do it, but you need to separate different parts of this transmission grid. It’s very important to diversify, but you cannot diversify transmission and distribution.

“You have to diversify generation. But if you don’t have a big enough transmission lines or a big distribution infrastructure, you can’t sell that power,” he said.

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