Electricity market reform remains one of the most debated issues across Africa’s power sector.
At Enlit Africa, industry leaders from utilities, regulators, government, the private sector and legal practice came together to examine whether unbundling has delivered on its promises, and what lessons can be learned as more African countries pursue market liberalisation.
Moderated by Professor Vally Padayachee, the discussion deliberately challenged conventional thinking around electricity market reform.
Rather than assuming unbundling is inherently successful, the session explored whether reforms are delivering better outcomes for utilities, investors and electricity consumers alike.
Opening the discussion, Professor Padayachee explained that the objective was to move beyond “the polite consensus of traditional conference panels” and instead question whether current reform models are producing balanced outcomes across the electricity value chain.
“We are here to talk about transmission bottlenecks, but the biggest bottleneck isn’t just a physical wire, it’s a structural one.”
Throughout the session, panellists repeatedly returned to one central message: reform is not simply about separating generation, transmission and distribution businesses.
Success depends on regulation, governance, sequencing and ensuring every participant in the market operates under clear and sustainable rules.
Joining virtually from Uganda’s Ministry of Energy and Mineral Development, Robert Mubiru challenged the suggestion that Uganda’s electricity reforms should be viewed as a failure.
Responding to questions around the country’s move to bring distribution operations back under government control, Mubiru argued that reform should be viewed as an ongoing evolution rather than a fixed destination.
“I don’t think that the term failure should even be used, reform is an evolutionary process.”
He explained that Uganda’s electricity sector has changed significantly since unbundling began.
Customer numbers have grown dramatically, generation capacity has expanded from approximately 180 MW to around 2 GW, and private sector participation has enabled major new generation projects.
Mubiru said one of unbundling’s biggest achievements had been exposing inefficiencies across generation, transmission and distribution, making it easier to hold individual entities accountable.
“One of the things that unbundling did very critically was that it exposed the areas where there are inefficiencies, and it made it easier to hold individual players accountable.”
He acknowledged that tariff pressures remain a challenge but maintained that governments must continually review and refine market structures as technologies, customer expectations and economic conditions evolve.
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Representing Eskom, Mutenda Tshipala argued that South Africa’s greatest challenge is not the concept of unbundling itself, but the order in which reforms are being implemented.
According to Tshipala, international examples such as the UK and Australia established clear market structures, tariff reforms and retail frameworks before fully liberalising electricity markets.
“One of the biggest mistakes we’re doing with this unbundling is the sequencing.”
He noted that South Africa’s reform process differs because wholesale and retail market changes are happening simultaneously while distributed generation technologies, including rooftop solar, are already widely available.
Tshipala warned that retail market rules have not kept pace with these changes.
“We don’t have a retail code at all. He noted that countries around the world continue to refine electricity market reforms decades after they began.
“There is no end state.”
He also highlighted concerns around municipal revenue recovery, explaining that existing tariff structures rely heavily on electricity sales even though many customers are now generating part of their own electricity.
Using the analogy of financing a vehicle, he argued that network infrastructure should continue to be funded regardless of how much electricity individual customers consume.
Willibrod Majola from the National Energy Regulator of South Africa (NERSA) emphasised that electricity reform cannot be separated from broader government policy.
Majola pointed to contrasting policy decisions on nuclear power in Germany and the United Kingdom to illustrate how energy system design ultimately reflects national priorities rather than purely technical considerations.
He also stressed that regulators have a responsibility to balance the sustainability of utilities with consumer protection.
“NERSA must ensure that the utilities recover their full costs as well as a return.”
Majola outlined several mechanisms supporting this process, including public participation, advisory forums, market code development, licence conditions and upcoming consultations on electricity pricing and tariff frameworks.
Speaking on behalf of the Energy Council of South Africa, Vasanie Pather acknowledged that private investors naturally respond to predictable rules, manageable risks and stable investment conditions.
“Private investors respond to incentives. They do so where the rules are clear, where the risks are manageable and where the incentives are predictable.”
While recognising that shareholder returns are an important consideration, Pather said private investment has also played an important role in improving energy security, supporting infrastructure development and attracting capital into South Africa’s electricity sector.
She argued that successful reform requires strong regulation, appropriate sequencing, cost-reflective tariffs and clear approaches to social equity.
Responding to questions around “cherry-picking” by private investors, Pather said this behaviour cannot simply be prevented through goodwill.
“The private sector is not going to stop cherry picking, it’s not going to do it out of goodwill.”
Instead, she argued that appropriate market rules and tariff structures are needed to create sustainable outcomes for both private investors and public utilities.
Kenyan advocate Sharon Rodah brought a legal perspective to the discussion, using a comparison between metered taxis and ride-hailing services to explain the different obligations placed on public utilities and private electricity providers.
Utilities, she explained, are required to serve all customers regardless of profitability, while private investors can choose projects that meet their commercial requirements.
“The utility cannot choose which customer to serve, the IPP or private sector, they’re like Uber.”
Drawing on Kenya’s experience, Rodah discussed previous concerns around power purchase agreements (PPAs), high electricity costs and procurement practices.
She noted that Kenya has temporarily suspended the signing of new PPAs while reviewing procurement processes and regulatory oversight.
According to Rodah, these issues reflected governance and contracting challenges rather than flaws in unbundling itself.
“These issues are not an unbundling problem, they are because the utility most times will come to the table with a lower bargaining power.”
She concluded that successful reform depends on well-resourced regulators, competitive procurement processes and ensuring utilities negotiate from a stronger position.
Although panellists approached the topic from different perspectives, there was broad agreement that electricity market reform is far more complex than organisational restructuring alone.
Discussions repeatedly highlighted the importance of effective regulation, transparent market rules, cost-reflective tariffs, appropriate sequencing and ongoing policy refinement.
Rather than presenting unbundling as either a success or failure, the session framed reform as a continuous process that must evolve alongside changing technologies, market structures and consumer needs.
As African electricity markets continue to transform, the discussion reinforced that lasting success would depend not only on attracting investment, but also on building regulatory frameworks capable of balancing efficiency, affordability and long-term system sustainability.
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