SA electricity 'in crisis'

2012-06-18 09:10
An electricity pylon is pictured. (Herman Verwey, Beeld)

An electricity pylon is pictured. (Herman Verwey, Beeld)

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Cape Town - Electricity supply in South Africa is in crisis despite the fact that there has been no repeat of the blackouts of 2008, the Free Market Foundation has said.

"What we have now is more of a crisis than people realise because the lights are being kept on creates an illusion of non-crisis, but in fact, the crisis is they are running their backup base load diesel generators 24/7," Leon Louw, executive director of the Free Market Foundation told News24.

The price of oil has direct implications for the running of the generators which should be used as backup for cheaper coal-fired power stations.

"The cost of generating power is tenfold of what it should be if we were keeping the diesel as base load and backup," Louw added.

Eskom has indicated that the tight electricity supply will be relieved when the Medupi Unit 1 power station comes online in 2013, but the Louw expressed doubts that this would happen on schedule.

Blackouts

"We are basically keeping the lights on at a potentially catastrophic cost and Medupi was meant to come on power last year and whether it will come on next year remains to be seen," he said.

Minister of public enterprises Malusi Gigaba said that the government was committed to preventing a repeat of the country-wide blackouts of 2008 that negatively impacted on economic activity.

"Government and particularly the department of public enterprises remains resolute that the country should never go through another period of painful rotational load shedding as experienced in the past," said Gigaba.

He said that during winter, electricity supply was under strain, but the utility was undertaking maintenance work to eliminate the backlog by 2013.

"To be forthright, the next 18 months, particularly the next few weeks, are expected to be the tightest we have endured thus far."

Gigaba said that his department was closely monitoring Eskom's progress on implementing programmes.

"The implementation of this strategy... [on electricity management] is monitored by the department on a weekly basis with the aim of assessing progress."

The Free Market Foundation said that political pressure and incentives have led to reckless behaviour at the state entity.

Bonuses

"We're keeping the lights in a way that according to expert advice we get is extremely reckless and the political pressure on Eskom...

"Eskom is under such political pressure and under perverse financial incentives. That is to say, bonuses get paid to Eskom management for keeping the lights on," Louw said.

The issue off financial incentives at Eskom came under the spotlight on Friday when Gigaba said he was unhappy with the bonuses paid to senior management at the utility.

Louw said the utility's behaviour was a response to a failed policy and perverse financial incentives that limited the accelerated rollout of independent power producers.

"My defence of Eskom is that it behaves rationally. If the government is willing to give it a perpetually protected monopoly, of course it will lobby for that. Policy makers should not succumb to these lobbies; that's where the problem is.

"While I say Eskom is behaving in a perfectly rational way; the people who aren't behaving are the policy makers."


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