Monday, 3 July 2023
News — ELECTRICITY LICENSING IN ESWATINI
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Understanding the process
In previous times, Emaswati considered electricity as a luxury, however, as times evolved, this luxury turned into a basic need. Today, electricity is one of the most sought for sources of energy in the country, which raised the need for increased capacity to meet the growing demand for a sustainable and reliable supply. The increased need for electricity inspired the country to put structures in place that will ensure sustainable electricity supply for the nation. As part of this strategy, the Eswatini Government developed the Energy Policy of 2003 which has since been amended in 2018 which was developed to address energy issues in light of the national development plan with renewable and energy from other alternative sources as a cornerstone of the Policy. Government moreover developed the Energy Regulatory Act of 2007 which establishes the Eswatini Energy Regulatory which has been mandated to administer the Electricity Act of 2007 by exercising control over the electricity supply industry. This Act moreover, provides that one of the functions of the Authority is issuing licenses under specified conditions to players in this industry. Following this initiative, the Electricity Licensing By-Laws were then introduced as surbodinate legislation for both the Regulator and industry players. In today’s article, we discuss the licensing process as outlined by the Electricity Licensing By-Laws, 2016.
Difference between a Licence and an Exemption
According to these By-Laws, there are two types of legal documents that the Regulator may issue to people who desire to enter the electricity supply industry. It can either be a license, determined by the nature of work the applicant intends to do within the electricity value chain, or an exemption from the obligation to hold a license. Section 9 of the Electricity Licensing By-Laws states that a generator who generates electricity with a plant of less than 100 kilowatt exclusively for own use shall not apply for or hold a license on condition that the person complies with the requirements set out in the Bylaws. It further states, however, that a generator who generates electricity with a plant of more than 100 kilowatt exclusively for own use shall apply for an exemption from the obligation to hold a license.
. This therefore means small-scale generators who generate less than 100 kilowatt for their own consumption do not need to apply for a license, however, if the generation for own use produces electricity that is above 100 kilowatt, this generator now needs to apply for an exemption from the obligation to hold a license. This exemption relieves the generator from the obligations of a generation license. It is crucial for Emaswati to understand these dynamics as they directly affect their activities related to the self-generation of electricity, whether the person is contemplating self-generation or running a generation plant for self-consumption. Let’s look further into the dynamics involved in the licensing and exemption processes.
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The Licensing Process
The Electricity By-Laws state that one licensee can hold multiple licenses as long as they meet the relevant criteria, so during application, the applicant must specify which license they are applying for. It could be a Generation license, Transmission license, Distribution license, Supply license, Export license or an Import license of electricity. Any of these applications could be for the issue, renewal, amendment, transfer or revocation of the license. It is therefore important to determine the context of the license application. These By-Laws further pronounce that applicants must state the date and period the license is required. As a minimum requirement, the applicant must motivate and provide justification for the license. It is important to evaluate the credibility of the parties applying for the generation license in order to determine their ability to successfully develop and manage the intended project. The applicants should demonstrate compliance to commercial, technical, environmental, policy requirements amongst others. It is crucial for the applicant to understand that in order to support the successful development of projects, the license will be awarded with some conditions precedent or lapsing conditions. Furthermore, the applicant must submit proof on an advertisement of the application published in at least two national newspapers circulating in Eswatini, for at least fourteen days before the application’s submission to the Regulator. This advert should provide a brief summary of the activity to be performed, whom it will be performed by and the period .
Once the applicant meets all of these requirements and qualifications, submits the application and pays the application fee, the Regulator will now consider the application. Depending on the nature of the license application, the Regulator may conduct public hearings or stakeholder consultations at such venues and times as it considers appropriate to canvass the opinion of interested parties on the application.
It is essential, however, to highlight that generation licenses for the purpose of feeding power to the grid, were in the past determined through uncompetitive bids, however the Minister of natural Resources and Energy in 2019 launched the competitive bidding process that is conducted through ESERA’s Capacity Procurement Unit. In this way, the Authority will be able to ensure the implementation of sustainable projects for the nation’s electricity supply, as well as ensure that these projects will strengthen the economy of the country. This process also ensures that such projects procured competitively, result in a competitive tariff which benefits the consumers in the long term, unlike unsolicited projects which used to be evaluated independently, with no optional tariff offering.
The Exemption Process
In the case of an exemption application, a similar application process is followed, where the applicant produces the required documents that specify the required information, including the size and location of the plant. The applicant must also pay the application fee of ten thousand emalangeni. Thereafter, the Regulator will consider the application and respond to the applicant within 120 days. It is crucial to emphasize that the reason an exemption differs from a license is that, here, the exemption holder will be exempted from certain license responsibilities such as paying license fees amounting up to 1 percent of the project’s revenue, annually to the Regulator.
Interested parties are encouraged to visit www.esera.org.sz to read more on these processes, as well as contact on 2404 2103/2404 8425 for more information.
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