24 November 2005

The new National Energy Regulator of South Africa (Nersa) will regulate the price of pipeline gas and petroleum for the first time in the country, reduce monopoly in the energy sector, improve competition and boost economic growth.

Nersa, established in terms of the National Energy Regulator Act of 2004, is mandated to regulate South Africa's electricity, piped gas and petroleum industries and to collect levies from people holding title to gas and petroleum.

A single regulator for the three industries will improve efficiency and cut costs, Minerals and Energy Minister Lindiwe Hendricks said at the body's launch on Tuesday. She said it was also expected to boost private sector participation in the energy sector.

Economic regulators such as Nersa ensure a level playing field and prevent abuse by monopolies. While legislation exists to govern the gas and petroleum pipeline industries, until now they have not been subject to control by a regulatory body.

Single major players
The regulator is important because it will encourage greater access and competition in a sector dominated by single major players: Eskom in electricity, Petronet in petroleum and Sasol in gas.

"We are confident that public-private partnerships in these projects will spur development of industries at the important industrial hubs," Deputy President Phumzile Mlambo-Ngcuka, SA's former energy minister, said at the launch.

"The petroleum pipeline and gas regulators will play an important role."

She said a strong system of regulation would give international investors much-needed confidence in the sector.

"The establishment of a single energy regulator is critical to the promotion of investment, diversification of sources of fuel and the need for central coordination of the energy industry," she said.

Nersa replaces the National Electricity Regulator (NER), which will continue to function for the next few months. Smunda Mokoena, former CEO of the NER, is to head the new regulatory body.

Nersa's functions will include issuing licences, setting and approving tariffs and charges, mediating disputes, gathering information pertaining to gas and petroleum pipelines, and promoting the optimal use of gas resources.

SouthAfrica.info reporter

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