Lord above! Don’t I just wish I had big brass ones like the management of Eskom.
In 1994 the ANC was handed – pretty much on a silver platter, if you please – a working economy with an efficient, stable and functioning infrastructure. Included in this delicious package was Eskom, a world-renowned electricity generator and distributor, fully maintained, profitable and – most importantly – affordable to the consumers of its products and services. It even had a generating surplus sufficient for a number of years of continuous national economic growth.
Within a few years of 1994 this picture began to change dramatically if unobtrusively until, in 2008, the true enormity of the ANC government’s failed parastatal policies and ‘transformed’ Eskom management became woefully apparent.
Despite years of warnings from industry experts, a chronic lack of investment post-1994 by Eskom and its primary shareholder (the ANC government) resulted in massive and hugely disruptive blackouts across the country. The economic and reputational losses to the country were unprecedented.
Not only had investment in capacity stopped but also essential technical and management skills were relentlessly and ruthlessly shed, all in the name of a demographic re-alignment within the Eskom workplace and boardroom – affirmative action, in other words. Salaries and bonuses for the new incumbents saw substantial increases.
Maintenance and re-investment were replaced by a policy of ‘wait for it to break then fix it’.
At the same time, and unbeknownst to the South African public, the business giants of Eskom and its ANC masters then sold power on to neighboring countries and a number of very large-scale electricity users (e.g. some mines and smelters) within South Africa at prices below the cost of producing that power, effectively forcing the ordinary South African domestic and business buyers of South African-produced electricity to subsidize those beneficiaries of Eskom’s largesse.
Then some bright spark (pun intended) – (and who, in a just and equal world, should have been drowned at birth) - within the government latched on to the idea of what a good idea it would be to increase the cost of power to a significant portion of the population by sectioning off those parts of the national grid within municipal boundaries, effectively saying to the councils involved; “Here is some electricity; why don’t you ‘distribute’ it to the end-users in your area for us so that we don’t have to? Oh! And by the way, when you do that, why don’t you add a hefty premium so that you can create yet another layer of bureaucracy and make a fat profit to fund whatever takes your fancy?”
Result? Some urban electricity consumers are paying upwards of 100% more than their compatriots living outside those grasping municipalities, to say nothing of further opportunities for widening graft and convenient administrative inefficiencies.
Then, following a growing concern that many consumers were either unable to pay for their monthly electricity supplies or were showing distressing levels of entrepreneurial skill in diverting electricity for use without benefit of having passed through a meter, another bright spark, (who, like his unknown colleague above, should have suffered a similar watery fate at the time of his arrival into this plane of existence), decided that pre-paid electricity meters were the way to go.
That pre-paid meters would have no impact on reducing the extent of electricity theft was of no matter; the key here was that pre-paid consumers, many of whom were urbanized, very poor or, because of poverty or perceived shiftlessness, could not be trusted with monthly credit accounts for their power supplies, could be charged an additional and sizeable premium for the privilege of having a new meter installed and for paying up-front.
Talk about hitting the jackpot! This is making money out of thin air! And just to cap it all, Eskom recently announced that it is applying for electricity tariffs to be increased by 16% per annum for the next five years.
So what is all this ancient history leading up to? A little bit of outrage, I’m afraid.
I have a problem with any system of government that willfully takes a publicly-owned national strategic asset (an asset which, at the same time, is pronounced by that very same government to be a basic human right) and connives and manipulates that basic public service into a scheme to generate revenues for the treasury. This equates to the use of speed cameras for revenue generation rather than as a mechanism to reduce traffic accidents and to educate road users. It is immoral and, just possibly, constitutionally unsound to use what is my property (as a tax payer) against me.
What makes it all the more repugnant is the fact that so much of the artificially enhanced revenue stemming from the re-sale of electricity via municipalities by way of pre-paid meters comes directly out of the pockets and mouths of the poorest and most vulnerable in society.
Think about it. These pre-paid customers are paying cash up front. If they don’t pay then they don’t get electricity. Absolutely no credit risk in that business model. And think of all the extra bank interest the municipalities and Eskom make from all those cash deposits before any electricity is ever used by the consumers – but those very same consumers have to fork out a considerable premium from their own pockets just to enable Eskom and its retailers to smooth out its cash flow. What, also, of the potential bank interest lost by those customers in stumping up cash before they receive the service? The poorest end up paying the highest prices.
And now Eskom wants to hike prices even further after four years of annual increases of at least 25% post-2008 – at a time when South Africans are already paying amongst the highest prices in the world for its electricity.
It would seem that, in the mad scramble for these seemingly limitless riches, the realization has been lost that they are not, in fact, endless. Also, it would seem that there is no recognition that the ordinary people of this country only have so much to give; we are being squeezed so much now that – before any further increases – the pips are not just squeaking but are being ground into a desiccated powder from which no fruit can ever issue.
An additional issue arises.
What does all of this say about the new morality of providing public services which determine the quality and value of life in any society at a profit – particularly when that service holds a monopoly and the consumer has no alternative but to take what is provided at the prices demanded? In a country such as South Africa which, in terms of its elected government, sits somewhere between the ideologies of the soft left and hard-line Marxist state interventionism, what is the ideological justification of commercial and state profiteering from essential services? The only apparent answer to that would appear to be gross opportunism of the worst kind which takes callous advantage of the lack of choices enjoyed by the consumers and the lack of accountability of the governing elite. That, to my mind, is not commercial acumen; it is nothing more than unadulterated robbery – with menaces – against the defenseless.
Is there a way out of the mess that has been created out of nothing? We do, after all, require a substantial increase in our generating capacity in order to meet not only current demand but also future energy requirements.
Perhaps there is.
Maybe the senior and executive management of Eskom should step down on the grounds of not being up to the task and for not being able to think outside of the box.
Maybe Eskom should immediately cancel the present supply agreements with the mines, smelters and other very large consumers. Let it go to court. There is no equity court on the planet that will enforce any contract that is so hugely to the detriment of one of the parties.
Maybe the ANC should stop playing political and commercial favoritism with its old revolutionary buddies from decades ago. The revolution ended in 1994. If neighboring countries want to use our power then they must pay realistic cross-border prices; alternatively, those countries should develop their own power infrastructures for their own populations and industries.
Maybe the re-sale of electricity should be discontinued or should be controlled so that municipal profits from such an unnecessary exercise are severely capped.
Maybe pre-paid charges should be reduced substantially to reflect the much lower collection costs enjoyed by Eskom and the municipalities and to better match the political rhetoric from the ANC about how much they are empowering the poor and previously disadvantaged.
Maybe the ANC and Eskom should issue bonds or explore other funding mechanisms rather than almost wholly relying on the consumer to finance the consequences of their failures in the past.
Maybe the ANC and Eskom should do more than paying lip service to developing alternative sources of power – particularly solar in this country of almost limitless sunshine.
I’m sure that there are other ideas that can substantially contribute to solving the problems.