THE ESKOM FIASCO
During the past week we have had a clear illustration of Eskom’s duplicity in dealing with the current electricity crisis in South Africa.
Firstly we have the acting CEO of Eskom apologising to the residents of Soweto as follows “First and foremost, on behalf of Eskom, I would like to personally apologise for the inconvenience that most customers have had to endure due to load shedding and other technical failures………” Furthermore a spokesperson for Eskom stated that they were not punishing the people of Soweto.
This was as a result of a march organised by the Johannesburg Region of the ANC to protest about a ten hour power cut on Friday 8 May 2015. The ANC regional chairperson stated that Eskom must listen to them because “we put them there” once again highlighting the ANC’s practice of conflating party and state. His statement now confirms my worst fears that the management of Eskom are political appointments and has nothing to do with their ability to produce electricity.
Surely the march should have been to Luthuli House, the ANC Head Office, rather than to Eskom, after all that is where the Eskom appointments come from.
Secondly, continuing with their threats to cut off the electricity to twenty municipalities that are in arrears with the payments to Eskom, this will have the effect of ‘punishing’ millions of people who pay their accounts regularly. But yet the residents of Soweto, who owe almost as much as the rest of the country combined, are not being ‘punished’.
The reasons for these double standards are simple to understand. The ANC is terrified that action against Soweto which falls into the Johannesburg Metropolitan Municipality could be lost to the ANC in next year’s local government election whereas the other twenty municipalities are all ANC strongholds.
Once again putting the interests of the ANC ahead of those of South Africa.
Thirdly, Eskom submitted an application for a 25.9% price increase to the National Energy Regulator (NERSA) for almost immediate approval. Fortunately NERSA has shown some semblance of independence and delayed considering the price increase until public hearings are held to enable the consumers to comment.
But why do we find ourselves in this precarious predicament is due to government ineptitude. The reason given by President Zuma that Apartheid caused the problem is patently incorrect. Apartheid can be blamed for many things but the power crises. In 1998 the White Paper on Electricity forecast that there would be a power shortage by 2007, we experienced our first load shedding in 2008.
Eskom‘s engineers proposed that a 1,2GW power station, equivalent to Koeberg, should be built every 18 months or one, equivalent to Kriel, should be built every three years. However, the ANC cabinet with Penuell Maduna as minister placed a moratorium on the building of power stations. This was only lifted six years later when it was too late with the decision to build two power stations Medupi and Kusile. Medupi was due for completion in 2012 and Kusile in 2017. Both are way behind schedule and well over budget.
Contrary to the views of ANC secretary general Gwede Mantashe this is not a ‘positive’ crises. No crises that damages the economy or causes job losses can be ‘positive’ it is plain and simply ineptitude, which must be rectified. There are a number of immediate steps that can be taken to rectify the situation thereby resolving Eskom’s cash flow problems and increasing the electricity supply. .
- Privatise Eskom through the sale equity to the private sector even if the government retains the majority shareholding or possibly selling of a number of the existing power stations;
- Broadening the power generation to expand both the quantity and size of the IPP’s, independent power producers, who would ensure that new sources of power resources are built quickly and on budget;
- Adopt and implement this long overdue bill which would remove the electricity transmission grid from Eskom and place it in a separate state owned entity;
- Publish a policy document to clarify the conversion of the diesel turbines to gas turbines and what further gas producing units are planned in the near future;
- Fast track the completion of Medupi and Kusile power stations preferably through handing over the project management to private sector project managers rather than the current in house Eskom project managers;
- Introduce a transparent procurement process to ensure that new projects, coal and diesel are obtained at competitive prices rather enriching dubious middle men;
- Place a moratorium on the payment of bonuses to senior management until such time as Eskom is financially sound. The R63 Mil paid over the past seven years should be investigated to assess the possibility of recovering them;
Unfortunately, COSATU and the SACP will probably veto such actions because it would prove that the private sector would be efficient. It is also still in the ANC’s interest to allow the crises to continue and to blame it all on apartheid.
The current actions being undertaken by municipalities to recover debts must be maintained and intensified in a fair, transparent and equitable manner. Any customer who has an overdue account should be given seven days to either pay or make arrangements to pay their account or their electricity is disconnected. All illegal connections should be disconnected and the perpetrators prosecuted. Regrettably I do not think that there is the political will to implement such a system.
The current system in place in my hometown of eMalahleni (Witbank) is that customers in the Eastern areas, Suburban areas, are cut off once their accounts are overdue and the rest have been allowed to get away with non payment hence the current situation where over R600 mil is owed to Eskom. The authorities have now sprung into action and the following steps are being taken:
- Cut offs in the Eastern suburbs continue as usual;
- Cut offs have started in the Western Areas (townships) have started;
- Negotiations, rather than cutting services, are taking place with government to pay their accounts;
- Action has now started to get businesses to pay;
I am sure that this is typical of most municipalities and action against defaulters has only started because of Eskom’s threats, which do not apply to Soweto of course!
My personal opinion is that Eskom will not enforce the threatened cut offs of the municipalities because it is probably illegal and most certainly unconstitutional. Conditions will then return to normal and the amount owing to Eskom because there are elections next year and in 2019 and after promising their voters free electricity in 1994 they are scared of losing votes.
Either the ANC must do the right thing or else our economic woes will continue, more jobs will be lost and load shedding will get worse.
Until next week,
This newsletter is published by Clive Hatch former Leader of the Opposition in the Mpumalanga Provincial Legislature and former DA Provincial Leader. These views are my personal views and do not represent those of any other person or organisation.