The 18.65% electricity hike is daylight robbery of the poor

Nelvis Qekema

While Eskom is contributing to the destruction of the economy through unending load shedding, it had the nerve to approach the National Energy Regulator of South Africa (Nersa) for an above-inflation 18.65% electricity tariff increase.

It escaped Eskom that load shedding means the reduction of service delivery and the disruption of households and industries.

Load shedding pushes the cost of production higher, without a corresponding increase in the quality and quantity of the product.

The unfortunate result is that industries either close or pass the production costs on to consumers.

That causes a rise in unemployment and poverty, as well as worsening inequality between the haves and have-nots.

While Eskom and Nersa are not blameless for the tariff increase, the nation must hold the government accountable. Rather than a corporate management failure, the load shedding monster is the result of public policy failure.

The ANC-led government does not deny that it was warned by Eskom executives as early as 2007 that the power reserves would be depleted by 2008 if there was no positive intervention.

Like Shakespeare’s Julius Caesar snubbing the soothsayer who warned him about his imminent death, the governing party arrogantly dismissed the Eskom warning. Then-government spokesperson Themba Maseko explained in 2008 that a decision was taken in 2001 not to invest in infrastructure development because it was hoped that independent power producers would close the gap.

The unfortunate result is that industries either close or pass the production costs to the consumers.

That causes the rise in unemployment and poverty, as well as worsens inequality between the haves and haves-not.

While Eskom and Nersa are not blameless for the tariff increase, the nation must hold the government accountable. Rather than a corporate management failure, the load shedding monster is the result of public policy failure.

The ANC-led government does not deny that it was warned by Eskom executives as early as 2007 that the power reserves would be depleted by 2008 if there was no positive intervention.

Like Shakespeare’s Julius Caesar snubbing the soothsayer who warned him about his imminent death, the governing party arrogantly dismissed the Eskom warning.

Then-government spokesperson Themba Maseko explained in 2008 that a decision was taken in 2001 not to invest in infrastructure development because it was hoped that independent power producers would close the gap.

We now know Eskom was deliberately allowed to rot to create space for privatisation, in line with the ANC’s neoliberal policies of Growth, Employment and Redistribution (Gear).

Besides, the apartheid energy policy never had in mind an Eskom that would be confronted with the absorption of black people into the grid, with their increased energy demands.

The ANC has presided over the Eskom crisis. The party and country’s then-deputy president Cyril Ramaphosa was, as far back as 2015, in charge of the so-called “war room” to deal with the deliberately created energy crisis.

As president, he set out to follow the instructions of the imperialist powers to force South Africa to phase out the use of coal in favour of renewable energy sources. Yet coal affords the country some comparative advantages.

Last year, Ramaphosa announced that $8.5 billion worth of investments would be made available (by Western countries) to South Africa for the country to move away from coal, and decommission some coal stations.

However, unable to cope with the risk of Russia as their major energy source, the Western superpowers have resorted to the use of coal – the same energy source they ordered Ramaphosa to dump.

It is against this background that the Azanian People’s Organisation (Azapo) staged a protest at the Nersa head office in Pretoria on Monday last week.

In the afternoon, Azapo turned the protest into a sit-in that lasted five days. Azapo felt that the 18.65% electricity increase was unjustifiable.

As the voice of the poor, and black people in particular, it resolved to challenge Nersa on its decision to grant Eskom the huge hike in the electricity tariff.

More so because Nersa’s public consultation processes were not adequately transparent.

Why the protest action? The government has a policy on inflation. The targeted rate of inflation, according to the policy, should be between 3% and 6%. Each time inflation goes beyond 6%, the South African Reserve Bank hikes the repo rate, which results in a higher interest rate.

The government is so committed to the policy that the Reserve Bank has only one mandate – to keep inflation under the 6% target.

The tool of hiking the repo rate is blindly used, even if inflation is caused by factors that have nothing to do with South African consumers, but everything to do with international factors such as the price of oil or the war in Ukraine.

Further, consider that the government is offering public servants a 3% salary raise, yet Eskom and Nersa think the same workers can afford an 18.65% electricity tariff hike.

The government has ignored impassioned pleas from labour and other economic analysts who wanted the Reserve Bank to have a broader mandate that would also take into account the burning issue of unemployment.

Yet the same government that wants to cap inflation at 6% has allowed Nersa to grant Eskom permission to increase electricity tariffs by 18.65%.

Anybody who has a basic understanding of economics will agree that the cost of electricity is one of the key drivers of inflation. When the cost of electricity goes up, the entire food chain in various economic sectors will be negatively affected, and inflation will rapidly rise.

When that happens, the government, through the Reserve Bank, will further hike interest rates.

The real victim of this will be poor South Africans, many of whom are living below the poverty line.

The truth is that Eskom does not have a problem with cash. Eskom has a problem of corruption and poor management. Throwing more resources at a corrupt entity will not make the entity deliver better and reliable electricity, but will only increase the pool of resources that will be available for looting.

It is Azapo’s submission that Eskom does not need more money. It requires honest management who will service the power stations and increase generation capacity. The fact that Eskom was generating at only 49% of its generation capacity was made public by the Minister of Energy and Mineral Resources, Gwede Mantashe.

Mantashe said that if Eskom could raise its generation capacity from 49% to 75%, load shedding would be history. For that to happen, all that was required was for Eskom to burn coal and maintain all its power stations and ensure that they performed at 75% capacity.

However, this simple solution to load shedding will not be implemented. There are powerful members of the political aristocracy who are making a killing by selling diesel to Eskom.

If load shedding ended, the politically connected fuel brokers would lose billions of rand. For that reason, load shedding is here to stay.

As a matter of fact, Eskom is running out of money because it spends billions of rand buying diesel to keep the lights on, albeit for a limited number of hours a day.

In order to get more money, it has to ask Nersa to approve the hefty tariff hike of 18.65%.

This is why citizens should never allow Nersa to grant Eskom the tariff hike. It is difficult to resist the temptation to conclude that Eskom wants this money to fund corruption at the power utility.

What is happening at Eskom is no different to what happens in various municipalities throughout the country. Politicians working with their tenderpreneur surrogates deliberately stop maintaining water purification plants.

When there is a crisis of water, the rotten politicians allocate contracts that ensure that water is supplied to residents via trucks. It is a lucrative business. If a political decision is taken that water should no longer be supplied via water tankers, then the incentive to sabotage water infrastructure would be removed.

As Bantu Biko said, the period of oppression is prescribed by the endurance of the oppressed. In other words, South Africans can be oppressed and exploited only to the extent that they allow it.

Through the protest action against Nersa, Azapo is saying: “Enough is enough, and no more should we take this abuse by Eskom and the government.”

Qekema is Azapo president and writes in his personal capacity.

Cape Times