Restructuring of the electricity supply industry in South Africa.

Abstract

The monopolistic South African electricity supply industry is undergoing a transformation that would change its ownership and market structure. The objective of this study was to determine whether the strategic choice to transform the industry is indeed appropriate. A qualitative, case based study of the existing and proposed South African electricity supply industry was performed. Various strategic tools and techniques, related to both strategic theory and electricity supply industry models, formed the basis of the evaluation. It was found that to overcome the critical weaknesses in the industry and to take advantage of the opportunities present in the dynamic and complex electricity supply industry the restructuring is appropriate. The restructuring would allow the South African Government to meet its objectives of having an efficient electricity supply industry and meet the huge suppressed demand for low cost electrification. South Africa intends adopting the wholesale competition model, however this study recommends that it should implement the single-buyer model. Should the restructuring be successfully implemented, customers in the South African electricity supply industry can expect high quality electricity at a competitive price.