Page 35 - Energize October 2021

VIEWS AND OPINION

It notes that several African VIUs,
including Eskom, are beset with myriad
difficulties arising from inadequate
infrastructure maintenance. In monopolistic
models, the lack of competition means that
there is little incentive to improve efficiencies.
“Many monopolistic VIUs in Africa
are now commencing unbundling from a
compromised position of over-reliance on
government subsidies. In this archaic model,
state-run VIUs are heavily subsidised with
funds drawn from other more profitable
economic sectors. The artificially reduced
household tariffs yielded by such systems
bridge the affordability gap, but ultimately
these models are unsustainable, and usually
result in the utility’s indebtedness, especially
when subsidies fluctuate with shifting
government priorities”, Hulak explains.
Several years ahead of most African
states in the modernisation and development
of its energy market and lauded as a power
sector leader on the continent, Ghana has
pioneered a path that other African VIUs can
learn from as they modernise and develop
their energy markets.
Like several other African VIUs, Ghana
also commenced unbundling from a weak
position, amidst a challenging socio-
economic context. Initially, the sector was
unbundled into separate generation and
transmission utilities, with regulatory bodies
created in parallel for technical regulation not yet succeeded, it does not undermine the fundamental directional rightness of the course the
and licensing, as well as for economic country is pursuing.
regulation and tariff setting. This unbundling In summary, Hulak notes that Africa’s traditional VIUs have the opportunity to embrace the
was an initial step for the later introduction new energy world rather than fight it – by leveraging their already existing expertise and resources
of IPPs to the national energy mix and to expand their product and service portfolio in a customer-centric way.
establishment of the wholesale electricity “Africa’s power sector can be fast-tracked into the new energy transition, with insights
market for bulk customers. gleaned from other places where unbundling has already begun in earnest. The strategic dilemma
Ever since, Ghana has continued the for African governments now is whether to focus on imported technologies for decentralised
path of reform and innovation in the power solutions or to develop integrated networks. The latter path requires more time and investment,
sector, including attempting to introduce but would boost local economies”, he concludes.
private-sector participation in electricity
distribution. Even though this initiative has Send your comments to rogerl@nowmedia.co.za

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