The ANC goes bonkers

2010-01-25 00:00

IN good form as usual, 702 Eyewitness news reported in a radio interview last week that the ANC will effectively rip billions of rand out of Eskom, the beleagured state-owned enterprise (SOE) and monopoly electricity generator and distributor.

ANC general secretary Gwede Mantashe confirmed on radio that the ANC will benefit from its 25% stake in Hitachi South Africa, which apparently holdsR6-billion worth of contracts to supply boilers to long overdue Eskom power stations currently in build mode.

Part of this is old hat. For some years it has been known that the ANC has taken stakes in business entities via a vehicle known as Chancellor House. Whether or not this is the case with Hitachi SA, a generic “Chancellor House”, has developed.

Last month, Business Leadership’s Michael Spicer, in a radio interview with Moneyweb, referred to “the Chancellor House factor”, when referring to Eskom.

“We’ve been working in the field of Eskom recently,” Spicer said, “and looking at the costs of putting up a power station and they are much higher here than they are in India or China. You begin to ask why is that, and there are a couple of elements. There is no doubt that elements of BEE [black economic empowerment] add a cost. What I might euphemistically call the Chancellor House factor adds a cost, local procurement adds a cost, and you ultimately have to decide, do you want to pay 30% more and have that reflected in the 30% higher tariff, or do you want to review some of those elements?”

It’s difficult to keep pace with the numbers in the Eskom saga, but Eskom is, of course, asking for tariff increases of 35% for the next three consecutive years. There has been a hysterical reaction, given widespread independent analyses that increases of this magnitude will effectively run the country into the ground.

That aside, there is a fundamental problem with the ANC benefiting from misery where its hands are directly grubby. The ANC has enjoyed an overwhelming parliamentary majority since 1994. SOEs like Eskom have been run by the state, as overseen by the ANC, which, in turn, has increasingly come to regard SOEs as its backyard.

In any event, Eskom has effectively been run into the ground under ANC rule.

In 1995, ANC ministers were presented with Eskom’s required build programme, but they took more than 10 years to react and sign off. In early 2008, Eskom collapsed. Governments can fool most of the people most of the time, but electricity either works or it doesn’t.

It may turn the stomach that the ANC controls Parliament, and effectively controls the awarding of contacts by SOEs to entities that can now include the ANC, but that’s not all. The foulest thing is that as a political party, the ANC has nothing to offer outside its gimcrack politics. The key components of a coal-fired power station are imported, in the form of boilers, turbines and generators.

In reward for the luck of having a briefcase with an ANC label, the country’s biggest political party scores billions. Mantashe told radio that “there was nothing wrong with the ruling party refusing to give up its shares”.

Some two years ago, ANC treasurer Matthews Phosa said publicly that the ANC would sell its shares in Hitachi South Africa. But most puzzling of all is the ANC’s convoluted approach to filling its pockets. It would be far simpler, and more transparent, if the ANC simply allowed itself to dip into the National Treasury from time to time, provided each dip was limited to a billion rand.

— Moneyweb.co.za

 

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