REDS process called off - Chabane

Cape Town - The plan to set up regional electricity distribution (REDS) has been halted with immediate effect, Collins Chabane the Minister in the Presidency responsible for Performance Monitoring and Evaluation said today.

Briefing media following yesterday's ordinary cabinet meeting, Chabane said Cabinet had opted to terminate the Electricity Distribution Industry (EDI) restructuring and to discontinue the process of setting up REDS.

He said cabinet approved the recommendation that the Department of Energy to take over the programmes previously run under the EDI Holdings.

Chabane said the department would now review the whole electricity value chain with a view to developing a "holistic approach" to revitalise electricity infrastructure, energy security as well as financial implications.

"An administrator will be appointed to attend to winding up of EDIH," said Chabane, adding that the board would remain accountable until the end of the current financial year.

Ompi Aphane, the Deputy Director General of the Department of Energy, said his department wanted to focus more on regulatory issues that affected municipalities.

He said largely due to poor investment in the distribution infrastructure municipal electricity networks had gone into such a "state of disrepair" that energy security was threatened.

The backlog of municipal electricity redistribution infrastructure was two years ago estimated to be at about R27 billion, he said.

Added to this the restructuring as contemplated under the EDIH process would have meant that municipalities would have required financial support to carry out REDS he said.

"And under the current circumstances of the economy it had become prudent to not strain the fiscus anymore to the extent that some of these municipalities would have become financially unviable due to this restructuring process," Aphane said.

He said the process of rationalisation of tariffs would continue however with the government recently having introduced a framework to cushion the poor from the increase in electricity. - BuaNews