Eskom's Power Struggle
 While South Africans are still reeling from the effect of two enormous electricity price hikes, Eskom is planning to implement a further three (each a massive 45 percent) over the next three years.
The argument, no doubt a valid one, is that without sufficient power resources, our economic future would neither be sustainable nor secure. Healthcare, education, safety and security and, perhaps most importantly, food production, all rely heavily on energy for their implementation. Simply put, making it happen, is going take a substantial amount of funding and the consumer (those that pay), are expected to bear the bulk of the burden.
Investigative journalist Bongani Bingwa of the Carte Blanche team, recently reported the existence of an internal confidential document, a business report of almost 300 pages, giving an overview of Eskom's performance up to June this year. It purportedly indicates that if Eskom were to clean up their act, as much as half the sum needed could be accounted for.
One of several shocking revelations is that Eskom have suffered a staggering 35 percent revenue loss in the residential sector, largely due to energy theft and electricity meters reflecting free supply.
Trade Union Solidarity spokesperson Jaco Kleynhans believes it stems from a management problem. He posed the question as to why they don’t, along with government and municipalities, simply put systems in place to ensure that 35 percent of electricity isn't stolen. He further stated that he can't see how this is sustainable over the long term.
Reyno Seymore (Economist, University of Pretoria) made the following observations:
- The 35 percent does not include non-payment or accounts in arrears.
- Non-payment or accounts in arrears amount to R2.8-billion, which has been outstanding for more than 60 days.
- Soweto accounts for more than R1.8-billion of this sum.
- Eskom would like to increase the amount of free electricity that they provide. The ramification being that while the poorest of the poor will benefit, the consumers who actually pay their bills would have to subsidize this.
Bobo Makoba of Soweto Electricity Crisis Committee informed Carte Blanche viewers that in terms of the freedom charter, electricity is a right, not a privilege.
“Some of the prepaid... we normally reconnect them to get their own free electricity system that was once installed in Soweto.”
In response to the question as to what would happen if the authorities were to stop them from reconnecting, he stated:
“No, they'd be like perpetrating a revolution with the masses on the ground because I for one, I can't afford to pay electricity. Even if they could say, 'Bobo, go and pay R100' that would be a problem for me because I can't afford to pay electricity, I'm not working, I am unemployed.”
Other revelations from this intended confidential report include:
- Mozambique who purchase electricity from Eskom, have had tariff increase of only 7 percent since 2008.
- Billiton have had a reduction of 37.8 percent, as its tariff is based on the price of aluminium, Eskom are selling to them at a loss.
The African Institute of Economic Modelling (AFRINEM) using an internationally recognized model from the US, forecast the effect, changes like the proposed tariff hike, will have on the economy. They warn that should Eskom's plans go ahead, the construction sector will be hardest hit and can expect up to an eight percent decrease in growth.
In addition to the effect it will have construction sector, the message from Jaco Kleynhans to the average bill paying consumer, is not encouraging either.
“If you add all the five increases up - the 27.5%, 31.3% as well as the three 45% increases, you get a total increase of just more than 500%... This means that a household paying R1 000 per month in 2008 will pay R5000 a month by the end of 2012. I don't see that many South African households will be able to afford that.”
Ernest Roper | Webmaster
What if Eskom were to bring an end to electricity theft, put a stop to the consumer subsidizing the Aluminum Industry and either blocked supply, or increased tariffs proportionately, to foreign countries?
Is it right that the consumer should take the bulk of the pain, when there are options available, which would allow us to share the burden?
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