THE National Energy Regulator of South Africa (Nersa) —
on which the public rely to keep Eskom prices and other energy tariffs
in check — has been depleted of skills and capacity as the contracts of
long-serving members have not been renewed.
The independent
regulator’s status is also under threat from an amendment bill drafted
by the Department of Energy, which will establish an appeal body for
Nersa decisions, to be chaired by the energy minister.
Nersa is an
independent regulator established by law which has been a bulwark
against price increases from state-owned Eskom, through close scrutiny
of its costs and efficiencies. It is critically important for tariff
setting in the oil and gas industries.
Nersa has been without a
permanent CEO for 18 months. Two of the most experienced and senior
regulator members — Thembani Bukula and Rod Compton — have not had their
contracts renewed after they expired in March. A fourth position — for a
part-time regulator — has also not been filled.
The energy minister is responsible for all the appointments at Nersa.
The
contracts of Bukula and Compton expired at the end of March. They were
then renewed again for three months, which ended in June. Neither was
asked to stay on. Compton has left the regulator and Bukula is serving
on a temporary contract until a replacement is found.
Former CEO Phindile Nzimande resigned in February 2015. Paseka Nku has been acting in the position since her departure.
Regulators
require a combination of high-level financial, economic, legal and
engineering skills. As these skills are seldom found in one person,
experience is enormously important for a good regulator.
In
response to questions about why replacements had not been sought in
good time for the posts, Muzi Shange, the chief operating officer of the
Department of Energy, said that the posts had been advertised and that
appointments would be made by the end of July.
He said that as
Eskom’s regulatory clearing account application had been under
consideration by Nersa at the time their contracts expired, it had been
decided rather to extend them. The Eskom application was finalised by
Nersa on March 1.
He also said Nersa had "implemented extensive
training programmes, aimed at ensuring the retention of institutional
memory and for seamless succession-planning processes to kick in when
critical individuals must be replaced".
As well as clashing with Eskom, Nersa’s independence has also been an irritant to the government, he said.
In
August last year, Energy Minister Tina Joemat-Pettersson submitted a
draft amendment to the National Energy Regulator Act, to provide for the
creation of an appeal mechanism against Nersa’s rulings.
In a
report made to Parliament’s portfolio committee in the last
parliamentary session, the department said that the Cabinet had sent the
bill back for redrafting as it wanted inserted "as a condition" that
the review board be headed by the energy minister.
Shange said the bill would be put to Cabinet again shortly after the August elections.
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