Cape Town – To facilitate collaboration between companies or institutions to address the electricity crisis by allowing them to engage in activities that are normally prohibited under the Competition Act, Trade, Industry and Competition Minister Ebrahim Patel has turned to Energy Block Exemptions.
Patel published the Energy Users and Energy Suppliers Block Exemptions, in terms of the Competition Act of 1998.
“Reforms in the competition law effected in 2019 provides for more flexibility when circumstances warrant it. The block-exemptions have been used during the pandemic and in crises such as the July 2021 unrest, to enable competitors to co-operate to address shortages of stock or facilities. This will now also be available to companies to address the energy challenges,” Patel said.
The block exemptions for energy suppliers allow energy suppliers to undertake joint investment in shared energy infrastructure; undertake joint financing and risk-sharing in energy projects; and undertake joint training and skills development.
The block exemptions for energy users allow energy users to secure backup or alternative energy supply through the joint procurement of backup or alternative energy, and to share backup and energy generation capacity. They also support energy users to promote the efficient use of energy though joint negotiation and purchase of energy and related product and services, and through joint financing of backup and alternative energy supply, the department said.
“The objective of the block exemptions is to assist institutions to work together to secure backup or alternative energy supply, reduce energy costs, promote the optimization and efficient use of energy supply and secure shared or adjacent sites, infrastructure, equipment and facilities.”
Leana Engelbrecht, from international law firm Herbert Smith Freehills explained that the Energy Block Exemption allows for collaboration between energy users to respond to the current electricity supply constraints subject to a process of notification to the Competition Commission and the DTIC.
“Energy Suppliers are required under the Energy Suppliers Block Exemption to effectively apply to the Commission for permission to collaborate and if that application is granted (potentially subject to certain safeguards, or conditions) the firms implementation of the collaboration agreements or practices will be monitored by the Commission (albeit not through an overly prescriptive process) and the permission to collaborate may be withdrawn by the Commission in certain instances,” Engelbrecht said.
These block exemptions were first published for input during the subsequently withdrawn National State of Disaster related to energy supply, she added.
“It is important for energy users and energy suppliers to understand the scope of these block exemptions not only if they wish to make use of these exemptions, but also to assess any engagement with parties in the value chain that may be acting under an exemption.”
More information can be found at gazette links via http://www.thedtic.gov.za/wp-content/uploads/48650.pdf ; http://www.thedtic.gov.za/wp-content/uploads/48649.pdf
Cape Times