Cabinet made a decision in December 2010 to discontinue the process of restructuring the Electricity Distribution Industry (EDI) through the establishment of Regional Electricity Distributors (REDs). 

 In response EDI Holdings has wound down its operations and closed as of the 31 March 2011.  As such the Department of Energy will review the entire electricity value chain to develop a holistic approach towards energy security.

Eskom and 187 municipalities undertake the distribution of electricity to approximately 9 million customers, 31,000 people are employed in the EDI with an asset base of R261 million.  The operation of the distribution facilities vary between regions and municipalities.  Networks in many municipalities are believed to be in a poor state, with substantial investment required to maintain and rehabilitate assets.  There has been a chronic underinvestment in the upgrading and maintenance of distribution networks.  Much of this is attributed to a lack of asset management strategies, insufficient investment in planned and existing networks, ageing networks, inadequate maintenance and limited coordination of efforts to address national problem.  Limited fund and a lack of skills further exacerbate this issue.

A sound electricity infrastructure is required to support growth targets, create investor confidence and meet customer expectations.  It is estimated that the current requirement of electricity distribution in respect of maintenance, refurbishment, network strengthening and skills development is in the region of R27.5 billion.  The Department of Energy (DoE) has indicated in its Strategic Plan 2011/12 – 2015/16 that this is to be reduced to R15 billion by 2014.

The key programme initiated by EDI Holdings – ‘Approach to Distribution Asset Management’ (ADAM) is forms part of the response.  According to the DoE Strategic Plan 2011/12 – 2015/16 the first step in this process will be to develop an in depth assessment of the actual backlog along with detailed geographical maps at metro city and secondary metros.  Parallel to this process is the need to identify interventions required to rehabilitate infrastructure that is needed in the short term to ensure electricity service delivery.

This Infrastructure Dialogue takes a look at the current state of the Electricity Distribution, and the response required in light of EDI Holdings operations being wrapped up and what needs to be addressed as the EDI restructuring moves into a new phase.

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