Transcript Slide 1

PROGRESS REPORT ON CABINET DECISION
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Outline
Background
Progress report on Cabinet decision
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Status of the Bill
Issues under discussion in the intergovernmental task team
National Pricing System
Issues under discussion on the National Pricing System
Way forward
• Speedy resolution of key issues
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Background
• In October 2006 Cabinet approved:
– The establishment of the 6 wall to wall REDs as public entities;
– That Eskom must be a shareholder in the REDs during the
transition period and reduce its shareholding over a period of
time.
• Cabinet also noted the:
– Introduction of the EDI Restructuring Bill to facilitate the
establishment of the REDs; and
– Drafting of a National Electricity Pricing System.
– That DME through EDI Holdings to oversee the establishment of
these REDs;
– That a strategy need to be developed to deal with capital
investment requirements for the REDs; and
– That a roadmap will be put in place to move from the current
state to the final REDs model.
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Progress report on the Cabinet decision
• Drafting of the EDI Restructuring Bill.
– Policy issues on the EDI Restructuring are currently under
discussion in the intergovernmental task team comprising of
National Treasury, DPLG, DPE and DME; and
– The first draft of the EDI Restructuring Bill is at an advance
stage waiting for finalization of the policy directives from the
intergovernmental task team.
• Issues under discussion in the intergovernmental task team.
– Eskom and local government compensation as it reduces its
shareholdings in the REDs;
– Governance of the REDs during the transitional period;
– Incentives schemes for municipalities to join the REDs;
– Assets transfer framework.
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Progress report on the Cabinet decision (cont.)
• National pricing system
– Department has initiated a process of developing the National
pricing framework; and
– The Department is currently running workshops with Eskom,
NERSA and other municipalities to investigate short falls to the
current pricing framework.
• Issues under discussion on the National Pricing System
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Current pricing system and its weakness;
Method of dealing with cross subsidies;
Ring fencing and pricing of electricity; and
Cost reflectivity and transparency.
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Way forward
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DME is in a process of looking into establishment of REDS as in
such a manner that they will assist the municipalities to execute
their Constitutional mandate regarding electricity
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The Department will expedite the resolutions of key policy issues so
as to finalise the EDI Restructuring legislation.
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Minister will undertake road shows to ensure that all stakeholders are
aware of the intentions of the EDI Restructuring.
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The National Pricing System will be finalised during the course of the
year to ensure that the pricing methodology is harmonised for the
whole industry.
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Thank you
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