Honourable House Chairperson,
The ACDP is cognisant that this Budget Vote, of some R6.06 billion, seeks to stabilise supply, accelerate generation capacity, and support energy transition. While these goals are necessary, the ACDP is not convinced that this budget adequately resolves the structural and regulatory constraints that continue to undermine affordability, reliability, and investor confidence.
A central concern of the ACDP is the persistent escalation of electricity tariffs, driven in part by the pricing methodology applied by Eskom and approved by NERSA. The continued use of the Modern Equivalent Asset Value (MEAV) model inflates the valuation of Eskom’s asset base, to some R1 trillion, while the Real Asset Value sits at some R400 billion, thus enabling higher tariff applications that place undue pressure on households, municipalities, and businesses. This approach does not reflect the depreciated, real condition of much of Eskom’s infrastructure, nor does it incentivise efficiency.
The ACDP positions that this budget also falls short in addressing governance weaknesses and operational inefficiencies within Eskom, including plant performance, maintenance backlogs, and financial sustainability. While allocations support new generation initiatives, insufficient emphasis is placed on grid expansion and modernisation, which remain critical bottlenecks for integrating renewable energy.
Moreover, there is limited clarity on timelines and measurable outcomes for energy reform programmes, including the unbundling of Eskom, especially the distribution sector, and the strengthening of the transmission entity. Without clear accountability frameworks, these reforms risk further delays.
As Kingdom builders, the ACDP recommends the following reforms: First, speedily amend the relevant electricity pricing legislation to require Eskom to adopt a Real Asset Value (RAV) methodology in tariff applications, ensuring that pricing more accurately reflects the actual, depreciated value of infrastructure. This would promote fairness and increase affordability for consumers.
Second, accelerate investment in grid infrastructure to unlock private sector generation and renewable energy integration. Third, strengthen oversight and performance management within Eskom, with clear consequences for underperformance. Fourth, enhance transparency in tariff-setting processes and ensure that NERSA applies stricter scrutiny to cost assumptions.
The ACDP advocates that this Budget Vote requires stronger regulatory reform, improved governance, and a more balanced approach to affordability and sustainability to effectively address South Africa’s energy crises.
