South Africa the Eskom Begging Bowl

South Africa

Eskom, the power giant of South Africa is once again holding the begging bowl for more money. The power giant need money; there is none left for maintenance, upgrades, and the continued blackouts will not stop until Eskom gets more money.

The Eskom power utility diverts electricity to neighboring countries, Botswana, Zimbabwe, Namibia, Swaziland, and Lesotho while South African faces rolling blackouts. Eskom cannot supply local power demands yet provide countless other countries.

ANC spin doctors come out in defense of the power giant and declare that the government has not received sufficient reports about the country being adversely affected by the ongoing power cuts. The power outages are crippling the economy, and the government does not recognize that the Eskom problem is a crisis at this stage.

Yet, (that is the magic ANC word), the spin-doctors would tell the good story of the new power plants, the escalating maintenance plans, the new CEO and ongoing commitment of how many people have received electricity since 1994. Not much is said about the Medupi power station that was scheduled to come online in 2012 and the failure of not completing this within the planned time-frame or the double cost the new plant will incur due to incompetence.

It is not only the Medupi power station; there is the coal-burning power plant meant to produce about 4,800MW once all units are completed. Of course, this would make a vast difference to the present capacity and could be used as a backup system while other generators are shut down for maintenance. Eskom changed the date from 2012 to 2013 and then moved on to 2014 and now it might be 2015 but more likely 2017. There is a tiny problem that needs to be resolved and the development of the control technology for the power plant to produce electricity is not finished. A French company Alstom is behind on the schedule, and Eskom approached a German Company Siemens to complete the first two-8000MW units. Unfortunately, Siemens did not perfect the technology either. In the meantime, Alstom will be working on the other four units. Competence at its best, build a power station around technology that is still being developed and not tested successfully. At least the building of the power plant is being done, and Eskom can produce something of the ZAR105 billion South African taxpayers have paid.

The power plant deal of Eskom puts the ANC arms deal to shame. At least the unions are smiling, as the delays, or sabotage of the project prolongs the building phase, it means the workers receive more benefits and higher wages. Eskom subcontracting to dodgy companies does not help the progress either. There was an incident when delays with supplying electricity were caused by faulty welding inside a boiler. Eskom took action against an unnamed contractor for falsifying paperwork and taking short cuts with procedural work.

As outgoing CEO, Brian Dames said in a media briefing “Eskom is in control.” One can question the merits of control, when school rooms are in the dark, homes are in the dark, business shut down due to no power, and chaos on the roads in South Africa.

Now Eskom wants a further 25.3 percent tariff increase and there is mounting criticism by Unions and public against the power giant calling for yet another bailout. The Congress of South African Trade Unions (COSATU) was quick to defend the working class of South Africa calling the increase an outrage against the poor people of South Africa. COSATU represents millions of ordinary workers who can barely afford to live above the breadline and increasing the tariff again will have an adverse effect on the well-being of millions.

Another outgoing Eskom CEO Tshediso Matona indicated that the problem and challenges for the power giant to keep the lights on were the failure of maintenance of plants. Matona, compared the power plant maintenance to that of a car, saying if not maintained would deteriorate. However, the question should be why consumers and, in particular, the working class be liable for Eskom’s incompetence. Eskom management is to blame for delays and maintenance programs, and it would be unfair to hold the consumers accountable for failures caused by mismanagement.

There is a major concern that business and communities will suffer from the impact of higher electricity tariffs. Eskom will not reduce the cost over a period of years and therefore once the green light is passed for the increase, there may yet be another demand for money next year.

COSATU does support the ANC and amplifies the good work and essential services the democratic government has delivered to the people of South Africa since 1994. However, COSATU believes an increase in electricity charges would negate all the good work the ruling party has produced. COSATU happily report on the people who have been excluded from basic services from the evil apartheid system and the generous free electricity of 50kwh a month given to its citizens. Again COSATU say this meager amount is not enough for the poor and increasing tariffs will force many to use dangerous or dirty sources of energy to survive.

Job losses, increases in essential commodities, including food are another concern COSATU raised should the power giant succeed in gaining another tariff increase. The spiraling effect of an increase in Eskom tariffs could force interest rates to increase and will push the working class into a deep poverty pit.

The high unemployment rate peaking at 36 percent could shift higher as more than 50 percent of South Africans are living in poverty-stricken situations. The economic growth of the country is a mere 1.3 percent for the first quarter of 2015, and any Eskom tariff increase could compound this state of affairs. Besides personal tax increases, another increase would have a detrimental effect. According to COSATU, who do not support the Eskom tariff hike.

COSATU said  Eskom is in a sad state of affairs, due to bad policy decisions made in the late 1990’s when the ANC government had intentions of privatizing the power giant of South Africa, and did not allow the entity to invest in electricity generation infrastructure. Poor management decisions or poor government decisions, now the poor working class, are to bear the brunt of Eskom and government failures. Eskom is holding the begging bowl and wants this filled yet, it is the people of South Africa who will ultimately suffer.

Opinion by Laura Oneale
Source
Moneyweb.co.za – No legal basis for Eskom 25.3% tariff application
Photo Courtesy of Gavin Fordham Flickr Page – Public Domain License

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